Central bank at the ready
Bank of Canada will do its part to support lasting recovery from coronavirus
OTTAWA — Canada’s central bank will do its part to help bridge the economy through the coronavirus pandemic while standing ready to adjust its asset purchases to support a lasting recovery, Bank of Canada Senior Deputy Governor Carolyn Wilkins says.
In a summary speech that outlined the overnight interest rate cuts and quantitative easing programs the bank has rolled out since the crisis began in mid-March, Wilkins made no mention of future moves. Canada’s economy has also been hithard by the collapse in oil prices.
However, she repeated the central bank could adjust its asset purchase program if needed to stimulate the economy rather than use it merely to enhance financial market liquidity.
“The Bank will do its part to bridge this period and support a lasting recovery,” noted Wilkins, who has been at the forefront of the bank’s messaging about its quantitative easing program.
“Such a change in tactic will eventually be needed, with the unemployment rate likely remaining elevated even after the economy has begun to reopen,” said Royce Mendes, a senior economist with CIBC, in a note.
Statistics Canada is set to release Canada’s March employment data on Friday, which is expected to be record-breaking. More than 7.2 million people have applied for some form of emergency unemployment assistance since the crisis began, Canadian government data shows.
Monday’s speech marked the first time Wilkins, 56, has spoken publicly since she was passed over for the Bank of Canada’s top job in favour of longtime central banker Tiff Macklem.
Macklem was named the Bank of Canada’s 10th governor on Friday and will start his new role on June 3 — the same day the bank is set to release its next key interest rate decision. Many market watchers had seen Wilkins as being the front-runner for the role.