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CANADA: Macklem Maintains Recent Rhetoric

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  • Unsurprisingly little initial reaction in CAD assets to Macklem’s remarks, with Senior Dep Gov Rogers having already commented since last week’s CPI report marked the only major release seen since the BoC cut 35bps for a third time on Sep 4.
  • The Can-US 2Y yield differential is 0.4bps higher at 65.1bps, still its highest since Sep 13, whilst USDCAD continues to hover close to session lows of 1.34543. 6

Summary of Macklem's remarks (in full here). 

  • BoC Governor Macklem said he's happy inflation has returned to target but "we need to stick the landing" while reiterating that after three quarter-point rate cuts officials are weighing whether they can move faster or slower.
  • Officials need to make sure to "keep inflation close to the centre of the 1%–3% inflation-control band". The Governor reiterated it is "reasonable to expect further cuts" given progress on inflation, and faster growth would help keep inflation close to target amid recent signs of weakness.
  • Similar to Senior Dep Gov Rogers after last week’s CPI report (which showed the headline Y/Y falling to the 2% target for the first time this cycle but core as expected and still a little higher): “We will also be looking for continued easing in core inflation, which is still a little above 2%. Shelter cost inflation remains elevated but has started to come down, and we are looking for it to moderate further.”
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  • Unsurprisingly little initial reaction in CAD assets to Macklem’s remarks, with Senior Dep Gov Rogers having already commented since last week’s CPI report marked the only major release seen since the BoC cut 35bps for a third time on Sep 4.
  • The Can-US 2Y yield differential is 0.4bps higher at 65.1bps, still its highest since Sep 13, whilst USDCAD continues to hover close to session lows of 1.34543. 6

Summary of Macklem's remarks (in full here). 

  • BoC Governor Macklem said he's happy inflation has returned to target but "we need to stick the landing" while reiterating that after three quarter-point rate cuts officials are weighing whether they can move faster or slower.
  • Officials need to make sure to "keep inflation close to the centre of the 1%–3% inflation-control band". The Governor reiterated it is "reasonable to expect further cuts" given progress on inflation, and faster growth would help keep inflation close to target amid recent signs of weakness.
  • Similar to Senior Dep Gov Rogers after last week’s CPI report (which showed the headline Y/Y falling to the 2% target for the first time this cycle but core as expected and still a little higher): “We will also be looking for continued easing in core inflation, which is still a little above 2%. Shelter cost inflation remains elevated but has started to come down, and we are looking for it to moderate further.”