BOC Schrembri: NAFTA uncertainty is impacting business investment

Lawrence Schembri, Deputy Governor of the Bank of Canada, has been taking questions in a Q&A and has said NAFTA uncertainty is weighing on business investment while the economy has added capacity and that there is not enough evidence to move neutral interest rate - that is dovish. 

However, USD/CAD is now trading below the 100-hr SMA located at 1.2803. At the start of the US session, USD/CAD was trading at 1.2869 - (renewed dollar selling at play at critical levels of a short-term correction in medium-term bear trend; US protectionism/soft dollar policy a thorn in the greenback's side).

Lawrence Schembri:

• Lacking evidence to move neutral interest rate
• Rates are below neutral due to NAFTA uncertainty
• Equilibrium neutral rate in Canada determined by global forces
• BoC recognizes that low rates create financial vulnerabilities
• capacity is being hindered by firm's reluctance to take on investment in face of uncertainty

About Lawrence Schembri:

Lawrence Schembri was appointed Deputy Governor of the Bank of Canada in 2013, serving as one of two deputy governors responsible for overseeing the Bank’s analysis and activities to promote a stable and efficient financial system. In 2016, he became responsible for overseeing the Bank’s analysis of domestic economic developments.