Stephen Poloz, governor of Bank of Canada, updated the outlook for the Canadian economy in the coming years and framework for unconventional monetary measures. The central bank states that the effective lower bound for interest rates as -0.50% instead of 0.25% as informed earlier.
The Bank foresees steady economic growth rate at 2% or above in 2016 and 2017 that will narrow down the output gap in the mid of 2017. Therefore, it is not in favour of further monetary easing.
"We are less optimistic about the outlook for growth, but nevertheless expect the Bank of Canada to remain on hold as economic slack is slowly taken in. That said, the outlook has deteriorated, and further or more prolonged weakness in commodity prices or foreign demand may blow growth off course and necessitate further easing", argues TD Economics in a research report.
