Today’s press conference won’t be on Tiff Macklem’s highlight reel.
The Bank of Canada Governor struggled to offer any kind of guidance about policy going forward or even a framework for how to think about trade war policy.
Instead, he struggled through a series of canned, disjointed talking points. In one instance, he repeated that they are ‘navigating carefully’ three times after referring to his notes. Later, he said that they were prepared to ‘act decisively’ only to try and redefine the term to say it wasn’t a code and really meant that they would be flexible and adaptable.
Acting decisively sounded more like wishful thinking from a central bank leader who repeatedly longed for some clarity in the economy or on tariffs. That’s a fanciful wish in Trump’s world and he would be better off to highlight likely reaction functions.
It would have been useful to wade into the debate about the transitory effects of tariffs and whether they would cut even with rising short-term inflation because of longer-term downside growth and inflation risks. Instead, he offered little useful commentary and both him and Rogers played down their own newly-released MPR forecasts.
A rare moment of honesty and straight-talking came when he talked about everyone was feeling the ‘erratic, unpredictable course of US trade policy’.
At times he tried to fall back on a pledge to ensure price stability and if you were to pick out one helpful line for businesses it was that the BOC would do everything it could to support the economy while respecting its mandate. Had Macklem leaned into that line of messaging, it would have been a successful press conference. Instead that was muddled by a rambling, unsure delivery and a lack of any useful guidance.
For now, the market is pricing in another 50/50 decision at the June 4 meeting and 47 bps of easing by year end. USD/CAD is down 73 pips on the day and fell about 45 pips after the rate decision but that only makes the loonie a mid-performer today amidst broad USD weakness.
This article was written by Adam Button at www.forexlive.com.