By Ketki Saxena
Investing.com – At a speech in Winnipeg today, Bank of Canada senior deputy governor Carolyn Rogers expounded on the Bank of Canada’s decision to hold its benchmark policy rate at 4.5%, as it paused after 8 consecutive interest rate hikes and became the first major central bank to wind down its tightening cycle.
The move had been largely expected after the Canadian central bank clearly signaled a conditional pause in January, and data since then (including 0% Q4 2022 GDP Growth) did little to lower the bar for further tightening.
Today, Ms. Rogers reiterated much of the narrative outlined at the BoC’s statement and press conference yesterday, and further focused on the need for a uniquely Canadian monetary policy response to address uniquely Canadian challenges.
Amongst these challenges, the deputy governor cited high levels of household debt in the country, and greater sensitivity to interest rates in the Canadian economy.
“As global inflationary pressures continue to recede, each country will need to chart its own course to get back to price stability”, the deputy governor noted. “But that’s the advantage of an independent monetary policy: We can get back to our inflation target of 2% in a way that makes sense for us, just as other central banks are doing for them.”
It’s an interesting emphasis, and one that speaks to growing concerns about the divergence of Fed and BoC policy and its negative impacts on the loonie, and the challenge of a depreciating Canadian currency driving up the cost of imported goods for Canadians and adding to inflation pressures.