BoC's Wilkins: Degree of accommodation provided by current policy interest rate remains appropriate

In her speech delivered to a business audience in Calgary, Carolyn Wilkins, Bank of Canada's senior deputy governor, reiterated that the degree of accommodation provided by current policy interest rate remains appropriate.

Key quotes (via Reuters)

  • Bank expects Canadian business investment to expand gradually overall.
  • Business investment expansion will be led by firms outside the oil and gas sector; should be strongest in areas where firms have confidence in future markets and sales.
  • Attractive financing costs as well as recent federal and provincial incentives are also key ingredients.
  • Bank sees potential for more trade friction between united states and the European Union, says some other developments on trade file are discouraging.
  • Governing council discussed the signals bank should take from very flat or, in some cases, inverted yield curve.
  • Developments in yield curve partly reflect change in tone by many central banks and possibly investor appetite for long-term fixed-income assets.
  • Developments also reflect concern about prospects for growth that is not reflected across other asset classes, bank will be attentive to these signals.
  • Curtailments and transportation constraints affecting oil sector should ease over time as rail capacity expands and line 3 pipeline is completed.
  • Overall inventories have increased sharply and to the extent this is unplanned, it may dampen production in some sectors later this year.
  • Bank is trying to square solid growth in jobs and steady growth in wages with weakness seen in spending over last two quarters, says this can be explained by oil, gas and construction cos cutting hours.

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