The Federal Reserve Bank of San Francisco produces some of the U.S. central bank’s best research on labor markets and monetary policy. And it’s from there that the Bank of Canada plucked its newest deputy governor,
Ever since Bank of Canada Governor Stephen Poloz took office, he has preached the merits of a weaker currency for Canadian exports. But the roughly 30 percent fall in the dollar since then has failed to coax an export-based revival in Canada.
After sailing relatively smoothly through the choppy waters of the financial crisis and its after-effects, the Canadian economy is finally getting caught up in the global economic slowdown.
The Bank of Canada is hoping the average Canadian continues to do the heavy lifting for the economy and gets it out of its rut from the first half of the year, even with dangerously high household debt levels. That may be a big ask.
The Bank of Canada will almost certainly hold policy steady on Wednesday but nearly half of the banks who do business directly with it predict at least one more rate cut this year.
With all signs showing the Canadian economic miracle is fading, the Bank of Canada is understandably starting to sound more dovish. The Canadian dollar has got a whiff of that, down about 10 percent from where it was this time last year.
Talks between Angela Merkel’s CDU and the centre-left SPD will resume on forming a German grand coalition but any agreement is probably weeks away yet.