Firstly, a tip of the hat to Stephen Poloz for proving once again that Canada is a shepherd not a sheep when it comes to interest-rate policy.
While other central banks cut in a bid to stimulate economies – and, in one case at least, appease a certain president - our governor has once again puffed his chest out and held up strong hiring numbers and under-control inflation to make it one year since the benchmark rate was changed. Happy anniversary.
Enjoy it while it lasts, though, because everything now suggests we will soon be falling in step with the rest of the world as the global slowdown stealthily gets its tentacles into our provinces and cities.
The BoC statement yesterday that it is “mindful that the resilience of Canada’s economy will be increasingly tested as trade conflicts and uncertainty persist” spoke to the bigger picture rather than domestic strength.
Concerns over the strength of the US dollar and Canada’s competitiveness as exporters will prey on minds until the next meeting, and with the Bank cutting its global economic growth outlook to 2.9% and reducing home GDP expectations to 1.6%, inflationary pressures look imminent
As Kevin Carmichael in the Financial Post pointed out, the Bank’s global outlook is the lowest since the Financial Crisis, while Canada stands apart from 30 other central banks that have eased monetary policy this summer.
So, kudos to the BoC for resisting the urge to follow and instead backing its own relative domestic stability. However, if trends continue, a rate cut is on our horizon, if not in December then first up in 2020.
And as Winnipeg advisor Grant White also points out, while one area of Canada may be more insulated from global uncertainty and economic woes, others, like Alberta for example, would welcome some help.
So while it feels good to be in a position to watch the Fed panic as it U-turns some more from its rate-hiking policy (remember that), Canadians may be wiser to keep their game face on and look to the future.