The early reviews from the Bay Street economists on the Bank of Canada's monetary policy report is that it merely fleshed out the improved tone that the bank already disseminated in its rate-setting announcement earlier this week.
But now that we're seeing the details, some are wondering whether this all implies that the dreaded quantitative easing, once seen as a serious card to be played in the central bank's hand, is about to fall right off the table.
"Despite the upward revision to growth, today's MPR reiterates the comments contained in Tuesday's [rate-setting]statement that, because of the earlier economic weakness, the risks to inflation 'are slightly tilted to the downside.' This provides the main argument for maintaining the current very low overnight rate at 0.25%. However, the changed view on growth implies less need for additional monetary ease. Increasingly, it appears that more aggressive policy actions, such as via quantitative easing, remain on the back burner and likely only to be invoked in the face of a faltering in the projected improving trend in growth," said Paul Ferley, assistant chief economist at Royal Bank of Canada.
That implication wasn't missed on currency traders, who see a lack of QE as a green light to bid the Canadian dollar higher. The loonie surged more than a penny after the release of the MPR, spiking above 92 cents (U.S.).