In his press conference following the Bank of Canada rate decision, Governor Poloz stated that further policy measures had been discussed at the meeting, which was a more dovish slant on the statement.
He stated that there had been a significant recovery in exports since July, although overall export levels were still lower than had been expected.
There were increased concerns that structural factors were undermining exports and this was an important aspect in the bank’s thinking on policy with concerns that there had been an important loss of export capacity.
Poloz also commented that additional stimulus measures had actively been discussed during the Council meeting to speed up the economy’s return to full capacity. He commented that the high degree of uncertainty surrounding the economic developments persuaded the bank not take any further additional action at this time with the bank not certain over the domestic outlook.
He also referred to uncertainty surrounding the US political and economic outlook as a significant factor in deterring near-term action.
More positively, he also commented that much of the downside effects from the oil shock had now been absorbed into the GDP data. Poloz confirmed that the government housing measures should lessen financial risks associated with the housing sector.
Poloz stated that the bank would monitor inflation risks closely.
The Canadian dollar weakened sharply during the press conference with a rapid reversal in USD/CAD and a move to near 1.3100 after hitting strong support on approach to the 1.3000 area.