BOC’s Poloz: Resilience of the Canadian economy could be seriously tested by coronavirus

In a scheduled speech delivered on Thursday, the Bank of Canada (BOC) Governor Stephen Poloz said that the resilience of the Canadian economy could be seriously tested by coronavirus, depending on the severity and duration of its effects.

Additional comments

Reiterates that bank is ready to cut rates further if needed to support growth and keep inflation on target.

Management demands a prompt and sizable monetary policy response to larger shocks to ensure economy remains well-anchored.

Bank felt that downside risks to economy were more than sufficient to outweigh continuing concern about financial vulnerabilities.

Global economy will at the very least be significantly disrupted by coronavirus in h1 2020.

Is possible global economy will snap back after health professionals have managed situation, but outbreak and effects could be more persistent.

Canada is headed for at least another quarter of very weak growth, Q2 could also be hit.

Real risk that business and consumer confidence will erode further, creating a more persistent slowdown.

Stresses from lower commodity prices will spread from energy-producing regions into other parts of Canada.

Declining consumer confidence naturally leads to reduced activity in housing market.

In this context, lower rates will help stabilize housing market rather than contribute to froth.

Many of the implications of coronavirus lie beyond influence of monetary policy.

Monetary policy can contribute by buffering effects of outbreak on consumer and business confidence; this contribution can be particularly powerful when shock is global, and response is coordinated.

Canadian labor market is in good health overall, continues to be source of resilience for economy.

Federal government could boost health of labor market by helping people deal with risks of relocation or make it easier for skilled workers to recertify in another province.

USD/CAD reaction

USD/CAD jumped a few pips on the above comments, still remained in familiar range around 1.3420, up 0.30% on the day.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD remains pressured after US data misses estimates

EUR/USD is trading closer to 1.1750, paring its recovery from earlier in the day as the safe-haven dollar is bid. US Consumer Sentiment missed estimates with 72 points in September. The financial woes of China's Evergrande are weighing on sentiment.


GBP/USD trades under 1.38 amid on UK data, dollar strength

GBP/USD is on the back foot, trading under 1.38 after UK Retail Sales figures disappointed with -0.9% in August, worse than expected. Brexit uncertainty and dollar demand weighed on the pair earlier. 


XAU/USD surrenders intraday gains, drops closer to $1,750 level

Gold struggled to preserve its intraday gains and dropped to the lower end of the daily trading range during the early North American session. 

Gold News

Experts say Ripple will win SEC lawsuit, which might propel XRP to new all-time highs

The latest development in the ongoing SEC vs. Ripple lawsuit is that documents are classified as privileged and blocked for public viewing. Though institutional investors are yet to take big bets on the altcoin in 2021, retail investors are actively trading in XRP.

Read more

US Michigan Consumer Sentiment Preview: Markets will have to look hard for positive signs

Consumer outlook expected to rebound to 72.2 in September. August’s 70.2 was the lowest since December 2011. Inflation and Delta variant wearing on US optimism. Markets face negative dollar risk from fading consumer optimism.

Read more