- There is enough excess supply in the economy to bring inflation back down toward 2% target
- We need to be more symmetric in our policy
- Canada does not need more excess supply, it needs growth and job creation to start picking up
- indicators are suggesting that broad base price pressures are easing
- If inflation continues to move down as we expect, it is reasonable to expect lower rates.
- We don't want to predetermine policy
- There was a clear consensus to cut by 25 basis points
- There was a clear consensus that the expected path of rates is lower but we are not on a predetermined path
- Broad agreement that inflation is going to come down, but progress can be uneven. We need to watch the opposing forces.
- Our assessment is that monetary policy is still restrictive. That is why we have cut our policy right at the last two meetings.
- We are determined to get inflation to 2% but we don't want the economy to weaken too much to push inflation below 2%.
- We have a long-standing housing imbalance pushed by a structural imbalance from increase in population
- Households are cutting back on discretionary spending
- Canadians are feeling the pinch from higher grocery prices. Rates coming down should help the consumer.
- Getting a job is harder for new immigrants, for young workers.
- The divergence is widening vs the US. There is limits on how diverged policy can go.
- With inflation moving lower in the US, my feeling is the divergence vs the US will not be particularly serious
- Inflation disproportionately affects.lower income Canadians
The press conference ends at 11:13 AM ET.
Overall, Governor Macklem stressed that there was clear consensus for a 25 basis cut. He commented on a number of occasions that if inflation continues on its path, there could be further cuts down the road, BUT that policy was not on a predetermined path. He said that the cuts were needed to have a more symmetric policy, and that policy was still restrictive.
The USDCAD did trade above the high of the "Red Box" I have been watching (above 1.3803), but the price can only reach 1.3807 before rotating back to the downside. The low price extended to 1.37768. The current price trades at 1.3788, right in the middle of the upper swing area between 1.3784 and 1.38033.
Buyers and sellers continue to battle against topside resistance.. If the sellers win (can't get back above 1.3803 and stay above), a move to 1.3762 and then 1.3734-43 will be eyed.
If the buyers win, a move toward the 2024 high at 1.38448 would be eyed.
