Free Trial

Correct:BOC Monetary Policy Statement From October 25 - Text>

--Correcting Date of Previous Statement: Sept. 6, 2017 (Not July 12)
     OTTAWA (MNI) -  The following is the complete text of the Bank of 
Canada policy statement issued Wednesday. The September, 2017 statement 
follows for comparison: 
     The Bank of Canada today maintained its target for the overnight 
rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and 
the deposit rate is 3/4 per cent. 
     Inflation has picked up in recent months, as anticipated in the 
Bank's July Monetary Policy Report (MPR), reflecting stronger economic 
activity and higher gasoline prices. Measures of core inflation have 
edged up, in line with a narrowing output gap and the diminishing 
effects of lower food prices. The Bank projects inflation will rise to 2 
per cent in the second half of 2018. This is a little later than 
anticipated in July because of the recent strength in the Canadian 
dollar. The Bank is also mindful that global structural factors could be 
weighing on inflation in Canada and other advanced economies. 
     The global and Canadian economies are progressing as outlined in 
the July MPR. Economic activity continues to strengthen and broaden 
across countries. The Bank still expects global growth to average around 
3 1/2 per cent over 2017-19. However, this outlook remains subject to 
substantial uncertainty about geopolitical developments and fiscal and 
trade policies, notably the renegotiation of the North American Free 
Trade Agreement. 
     Canada's economic growth in the second quarter was stronger than 
expected, and was more broad-based across regions and sectors. Growth is 
expected to moderate to a more sustainable pace in the second half of 
2017 and remain close to potential over the next two years, with real 
GDP expanding at 3.1 per cent in 2017, 2.1 per cent in 2018 and 1.5 per 
cent in 2019. Exports and business investment are both expected to 
continue to make a solid contribution to GDP growth. However, projected 
export growth is slightly slower than before, in part because of a 
stronger Canadian dollar than assumed in July. Housing and consumption 
are forecast to slow in light of policy changes affecting housing 
markets and higher interest rates. Because of high debt levels, 
household spending is likely more sensitive to interest rates than in 
the past. 
     The Bank estimates that the economy is operating close to its 
potential. However, wage and other data indicate that there is still 
slack in the labour market. This suggests that there could be room for 
more economic growth than the Bank is projecting without inflation 
rising materially above target. 
     Based on this outlook and the risks and uncertainties identified in 
today's MPR, Governing Council judges that the current stance of 
monetary policy is appropriate. While less monetary policy stimulus will 
likely be required over time, Governing Council will be cautious in 
making future adjustments to the policy rate. In particular, the Bank 
will be guided by incoming data to assess the sensitivity of the economy 
to interest rates, the evolution of economic capacity, and the dynamics 
of both wage growth and inflation. 
     -- 
     The following is the text of the BOC statement released on 
September 6, 2017: 
     The Bank of Canada is raising its target for the overnight rate to 
1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the 
deposit rate is 3/4 per cent. 
     Recent economic data have been stronger than expected, supporting 
the Bank's view that growth in Canada is becoming more broadly-based and 
self-sustaining. Consumer spending remains robust, underpinned by 
continued solid employment and income growth.  There has also been more 
widespread strength in business investment and in exports. Meanwhile, 
the housing sector appears to be cooling in some markets in response to 
recent changes in tax and housing finance policies. The Bank continues 
to expect a moderation in the pace of economic growth in the second half 
of 2017, for the reasons described in the July Monetary Policy Report 
(MPR), but the level of GDP is now higher than the Bank had expected. 
     The global economic expansion is becoming more synchronous, as 
anticipated in July, with stronger-than-expected indicators of growth, 
including higher industrial commodity prices. However, significant 
geopolitical risks and uncertainties around international trade and 
fiscal policies remain, leading to a weaker US dollar against many major 
currencies. In this context, the Canadian dollar has appreciated, also 
reflecting the relative strength of Canada's economy. 
     While inflation remains below the 2 per cent target, it has evolved 
largely as expected in July. There has been a slight increase in both 
total CPI and the Bank's core measures of inflation, consistent with the 
dissipating negative impact of temporary price shocks and the absorption 
of economic slack. Nonetheless, there remains some excess capacity in 
Canada's labour market, and wage and price pressures are still more 
subdued than historical relationships would suggest, as observed in some 
other advanced economies. 
     Given the stronger-than-expected economic performance, Governing 
Council judges that today's removal of some of the considerable monetary 
policy stimulus in place is warranted. Future monetary policy decisions 
are not predetermined and will be guided by incoming economic data and 
financial market developments as they inform the outlook for inflation. 
Particular focus will be given to the evolution of the economy's 
potential, and to labour market conditions. Furthermore, given elevated 
household indebtedness, close attention will be paid to the sensitivity 
of the economy to higher interest rates. 
--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com
[TOPICS: M$C$$$]

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.