BoC Gov. Poloz: Bank has tools available to deliver that stimulus

In the opening statement before the Senate National Finance Committee, the Bank of Canada governor Stephen Poloz says "if further monetary stimulus is required to meet our inflation targets, the bank has tools available to deliver that stimulus."

Poloz, speaking to the Senate's finance committee, also reiterated the central bank was prepared to increase the size of special programs it has introduced to support the smooth functioning of financial markets.

Key comments 

Says there is considerable uncertainty about the future course of the coronavirus pandemic.
Reiterates that bank is prepared to augment the scale of any of its programs if needed to support market functioning.
Reduction in bank's policy rate is entirely consistent with the inflation-targeting agreement under which we operate.
Lowering our policy rate to the effective lower bound is the best contribution we can make at this time to complement the government’s fiscal efforts.

Additional comments

Negative rates are needed only in extreme conditions.
Extreme conditions may happen if fiscal policy is not used.

Expects provisions on impaired loans to be higher and 'lumpier' quarter on quarter over the next couple of years -conf call.
Expects provisions on performing loans to be much lower in Q3 than in Q2.
Doesn’t expect loan originations to return to pre-COVID-19 levels before year-end.
Base case is that unemployment rate won't return to pre-covid-19 levels for 3-4 years.

USD/CAD update

On the whole, the CAD seems to be in a less precarious position now that oil is stabilising. However, there are plenty of risks out there which could take down the black gold once again. 

• USD/CAD breaks critical monthly support, eyes on geopolitics