This page has been archived and commenting is disabled.

Bank Of Canada Fires Shot Across Bow, Says "Withdrawal Of Stimulus Will Likely Be Required"

Tyler Durden's picture


With the entire world engaged in global coordinated easing, slashing, burning, and overall lowering rates and printing money by the wheelbarrow, the Bank of Canada just fired a shot across the bow. Here is the kicker: "Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. Over time, some modest withdrawal of monetary policy stimulus will likely be required." Surely they must be punished for this blasphemy in the holy church of Saint John Maynard and the apostles of collapsing fiat.

The Loonie is happy:

Goldman is not. From GS' Andrew Tilton.

Keeping and strengthening the tightening bias, a hawkish surprise


The Bank of Canada today kept the target for the overnight rate unchanged, as was widely expected. Instead, the main focus today was on the language of the statement following Governor Carney’s speech last week at which he omitted mention of the BoC’s tightening bias. In the event, the tightening bias was strengthened, while the growth forecast was kept essentially unchanged. Overall, relative to the speech by Governor Carney last week, this represents a big surprise and suggests that concern over imbalances in the household sector may have grown.


In contrast to Governor Carney’s speech last week, where the tightening bias was omitted, the language of the tightening bias has been strengthened in two ways. First, language that conditioned tightening on the pace of the recovery has been dropped. Second, tightening is now called “likely,” where as before it was termed “may become appropriate.” The tightening bias language now reads: “Over time, some modest withdrawal of monetary policy stimulus will likely be required, consistent with achieving the 2 per cent inflation target.” The statement now explicitly also mentions the evolution of imbalances in the household sector, which suggests that concerns over household leverage have moved up the list of priorities for the Bank of Canada.


In this context, the Bank of Canada held its growth forecasts essentially unchanged. Growth for 2012 has been revised up to2.2% in 2012 (from 2.1%), was kept unchanged at 2.3% in 2013 and taken to 2.4% in 2014 (from 2.5%). Given Governor Carney’s emphasis on the deterioration in business sentiment and the investment outlook, this is also a hawkish surprise. The statement refers as it did previously to “very stimulative financial conditions” as sources of support for consumption and business investment. These seem to have trumped the concern over higher frequency indicators that were pointing to weakness. The output gap is now expected to close end-2013, slightly after the H2 2013 date given previously.


Overall, the statement stands in marked contrast to the Governor Carney speech last week and sounds more hawkish than we expected. However, we are sticking to our call of no rate hikes until Q4 2013

Full statement link here, and a side by side comparison with the last statement below.



- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 10/23/2012 - 09:11 | 2912321 LawsofPhysics
LawsofPhysics's picture

Translation; Banks and the politically-connected corporations are full of paper again, fuck eveyone else.

Tue, 10/23/2012 - 09:18 | 2912348 Stoploss
Stoploss's picture


Tue, 10/23/2012 - 09:19 | 2912361 Stoploss
Stoploss's picture

Alert the Knights of Keyne...

Tue, 10/23/2012 - 09:59 | 2912501 Pladizow
Pladizow's picture

Zamboni vs. Nascar!

Tue, 10/23/2012 - 10:16 | 2912556 saturn
saturn's picture

Thank you Zer0 Hedge for highlighting the funny text in the bank's ScribD statement.

Tue, 10/23/2012 - 11:14 | 2912804 francis_sawyer
francis_sawyer's picture

Oh good ~ now we can BLAME CANADA!...

Tue, 10/23/2012 - 10:53 | 2912726 The trend is yo...
The trend is your friend's picture

the vampire squid doesn't have anyone in BOC or is their infighting?

Tue, 10/23/2012 - 11:10 | 2912791 fasTTcar
fasTTcar's picture

Carney is an ex squidy.

Tue, 10/23/2012 - 11:38 | 2912887 prains
prains's picture

wwhich means the squid has the xmas party photos locked up in their vault and will use them whne needed, damn those hookers

Tue, 10/23/2012 - 09:21 | 2912368 stocktivity
stocktivity's picture

Until they all stop printing money out of thin air it's all bullshit!

Tue, 10/23/2012 - 09:29 | 2912395 CPL
CPL's picture

Translation, credit crunch in Tar Sands and double price coupon day for oil.


I want them to raise the rates and then we can finish this nonsense.   It's credit that makes large, expensive gas happen...not political will.  Wouldn't it be neat if it rose to 19% like the early 90's again?

Tue, 10/23/2012 - 09:49 | 2912463 LawsofPhysics
LawsofPhysics's picture

rates can't raise without bankrupting the entire western world -  Rock meet hard place.  Boom motherfuckers.  This is not the 70's 80's or 90's, so sorry round eye.

Tue, 10/23/2012 - 10:00 | 2912509 Vince Clortho
Vince Clortho's picture

Yup.  Can't stop printing; Can't raise interest rates.

The cp boys have stepped in it again.

Perhaps creating another fictional organization with an acronym name is in order.

Tue, 10/23/2012 - 12:00 | 2912941 CPL
CPL's picture



It's true.  We've got a new breed of Political morons running the show here.  They had a choice to survive this mess five years ago.  They choose wrong and now all Canuck pensions, savings, RRSP, are finished to roll with the printing chain.


What should have happened is rates should have hit 12% after the first market shit storm in 2008.  It would have been rough, but like the 90's we would be emerging from a bad place wealthier and wiser.

Tue, 10/23/2012 - 10:50 | 2912712 Nobody For President
Nobody For President's picture

It would not be neat CPL, it would be very, very messy..

Tue, 10/23/2012 - 18:32 | 2914255 bilejones
bilejones's picture

Well, Corporal. That would be the early 80's


Tue, 10/23/2012 - 09:52 | 2912482 AntiMort
AntiMort's picture

Carney has been saying this for years now.  All talk no action.

Tue, 10/23/2012 - 11:08 | 2912787 Bay of Pigs
Bay of Pigs's picture

Thats exactly right, he's nothing but a bullshitter and a liar.

And he's a former Goldman Sachs guy too. Go Figure...

Tue, 10/23/2012 - 12:09 | 2912981 nowhereman
nowhereman's picture

Hey, lighten up.  Canada has decided to do away with the penny, they must be doing something right.

Tue, 10/23/2012 - 09:11 | 2912322 TheCanadianAustrian
TheCanadianAustrian's picture

They've been making this statement for quite a while.

Tue, 10/23/2012 - 09:14 | 2912334 malikai
malikai's picture

Have they just been talking or have they actually done anything material?

Just wondering how believeable this is.

Tue, 10/23/2012 - 09:29 | 2912404 anarchitect
anarchitect's picture

It's all talk. ZIRP+1 continues despite speculation that rates would slowly rise.

Tue, 10/23/2012 - 09:36 | 2912430 BobPaulson
BobPaulson's picture

Export driven economy where 70% of trade is in to US. Add to that that only 20% of the voters live where all the wealth is being generated. Result: the ex-squid Carney can't kick the zirp herion as easily as he bragged he could last year.

Tue, 10/23/2012 - 09:44 | 2912445 Village Smithy
Village Smithy's picture

You nailed it. Seriously, your consumers are in debt up to their eyeballs and because of this you are going to raise interest rates? Why doesn't he just threaten to spank them all instead?

Tue, 10/23/2012 - 09:56 | 2912491 Pantafulius
Pantafulius's picture

Spanking was adressed in his last statement.  A few examples were even made.  However people soon found out that Carney has a very weak arm. 

Tue, 10/23/2012 - 09:12 | 2912324 stateside
stateside's picture

Those loonies.


Tue, 10/23/2012 - 09:13 | 2912327 BeetleBailey
BeetleBailey's picture

The 60 SMA FX Loonie chart looks....looney!

Tue, 10/23/2012 - 09:13 | 2912331 Dr. Engali
Dr. Engali's picture

Basturds! How dare they pull away the punch bowl when the festivities are just getting started.

Tue, 10/23/2012 - 09:30 | 2912407 CPL
CPL's picture

You kidding, it's the ProCon position to apologise to China and give them an opening to purchase what they like with cash.


Cash > credit

Tue, 10/23/2012 - 09:14 | 2912336 -1Delta
-1Delta's picture

loonies- withdrawl- since when?

Tue, 10/23/2012 - 09:16 | 2912343 malikai
malikai's picture

I'll add that once you blow your load, it aint worth pulling out.

Tue, 10/23/2012 - 09:18 | 2912347 caimen garou
caimen garou's picture

they just fired a shot of bullshit across the bow of the zombie boat, another words we will keep doing the same thing until we do something different and we dont know what that will be until after the US elections.

Tue, 10/23/2012 - 09:17 | 2912352 Cursive
Cursive's picture

Canada has always been a little different and that's a good thing.

Tue, 10/23/2012 - 10:02 | 2912518 Zero Govt
Zero Govt's picture

Yes, we wouldn't want every country in the Western world looking identical know, looking bankrupt, blown up in a 30 year bwanker debt-fueled property, consumer and Govt spending junkie quagmire

let's hear it for Canada doing it different  ..eek!

Tue, 10/23/2012 - 09:19 | 2912354 fonzannoon
fonzannoon's picture

Canada is shitting a solid tungston brick as their housing market is watching the floor give way.

Tue, 10/23/2012 - 09:35 | 2912422 Metalredneck
Metalredneck's picture

You are about to see Sub-prime; Northern style!!

Tue, 10/23/2012 - 09:35 | 2912429 Lost Wages
Lost Wages's picture

Canada and Australia have good times ahead. If they want to know what's coming they can look at Las Vegas, Nevada during the last decade.

Tue, 10/23/2012 - 09:20 | 2912365 monopoly
monopoly's picture

And how expensive is talk?

Tue, 10/23/2012 - 09:26 | 2912367 Wakanda
Wakanda's picture

Oh Can-a-da!

Withdrawal of stimulus sounds like someone has shot their wad and is ready to smoke a cig.

Tue, 10/23/2012 - 09:23 | 2912374 ItsDanger
ItsDanger's picture

USD has forced the BOC to keep rates lower than they want for a while now.  From a domestic perspective, rates should be higher than they are presently.  At least some people at the BOC remember the early 90's.

Tue, 10/23/2012 - 09:27 | 2912392 swissaustrian
swissaustrian's picture

I guess there not yet a Goldmanite in charge of the BOC?

Tue, 10/23/2012 - 09:31 | 2912411 anarchitect
anarchitect's picture

Sorry, Mark Carney is a former Goldmanite.

Tue, 10/23/2012 - 10:06 | 2912521 Zero Govt
Zero Govt's picture

Goldmanshite you mean

Tue, 10/23/2012 - 09:31 | 2912408 Arkadaba
Tue, 10/23/2012 - 09:37 | 2912433 Big Corked Boots
Big Corked Boots's picture

Nice avatar!

Tue, 10/23/2012 - 10:03 | 2912519 Arkadaba
Arkadaba's picture

These boots are made for walking ....


Tue, 10/23/2012 - 09:33 | 2912418 Confundido
Confundido's picture

That bullshit sentence sounded to me like when I try to convince my kids to go to bed: "...John, you better go to bed now or else..."...say it ten times, they end up going to be after 10pm and the tragedy is that I repeat myself every single fucking night without results...

Tue, 10/23/2012 - 09:38 | 2912439 philosophers bone
philosophers bone's picture

Words or phrases in statement that have imprecise meaning or open to interpretation:

"Over time", "some", "modest", "withdrawal", "of", "monetary policy", "stimulus", "will likely be", "required".


Tue, 10/23/2012 - 09:40 | 2912441 rsnoble
rsnoble's picture

Awesome. Who would've ever thought Canada would've kick started the inevitable collapse?

If this whole system is a crack addict it's obviously time for therapy. Not gonna be pretty, the padded cells would be a cake walk compared to what's coming.

I'm only 43, i'd much rather get it over with than endure a 25 year long assfuck.

Tue, 10/23/2012 - 09:56 | 2912493 LawsofPhysics
LawsofPhysics's picture

"I'm only 43, i'd much rather get it over with than endure a 25 year long assfuck."



Classic.  Of course, those on the "right" side of that assfuck might have a different idea.  I guess the question is who owns the political class, you or them?

Tue, 10/23/2012 - 09:40 | 2912443 malikai
malikai's picture

USDCAD this morning, was pretty funny:

Tue, 10/23/2012 - 09:41 | 2912448 soopy
soopy's picture

ahaha Carney may god have mercy on your soul

Tue, 10/23/2012 - 09:51 | 2912471 Inthemix96
Inthemix96's picture

I was just about to type something witty and a little bit relevant and thought fuck it.

Fuck you bernank you fucking multiple nation wrecking dwarf cunt.

And fuck me, I now feel better.

Tue, 10/23/2012 - 10:02 | 2912516 unrulian
unrulian's picture

you forgot squirrely, bald, arrogant 12 cock-meat sandwich eating assophant

Tue, 10/23/2012 - 12:35 | 2913042 pufferfish
pufferfish's picture

@in the mix 96


Look at the quality of comment in this old ZH article :

None my use of english; comment, rather than remark.

You both generally lower the tone. Please, lets not let narcissistic adolescent inside have a mouth piece.


Tue, 10/23/2012 - 15:32 | 2913651 unrulian
unrulian's picture

@puffer soon as i see a post not start with Bitchez i'll lower my tone....BTW your translator seems to be malfunctioning puffer

Tue, 10/23/2012 - 09:57 | 2912498 Herdee
Herdee's picture

If oil drops more and starts to retest the 75 level then watchout below.Canadian household debt is astronomical.There is still over a million unreported unemployed,a slowdown in commodities and in Europe and in China.Canadians have been borrowing against their homes at record levels too.I think they'll even let homeowners in Canada still borrow up to 85 % of a homes value),incredible.You can buy insurance on your mortgage through CMHC and the stupid government thinks the insurance arm will provide the cushion if things go wrong. It almost reminds one of the U.S. history.If the Bank of Canada bumps interest rates up after Christmas and oil continues to drop with a slowing world economy,the Loonie could slide big.Basically right now it's the western Canadian economy (the oil)holding things up and providing tax revenue to Ottawa.Eastern Canada is already a writoff with Quebec and Ontario with record debt levels.The Province of Ontario with the most population has been downgraded.Its auto business is horrible.Don't forget that these guys are something like 800 plus billion in the hole on the overall deficit and everyone thinks that they are doing OK?The federal government is still got this national security act that prevents taxpayers from finding out what the total bill and spending is in Afganistan.Some speculate that the figures are easily into the tens of billions.They got sucked into this war against a plant that you can never win.Add the fact that the CIA is making a fortune there off of the dope (heroin)and laundering the money legally through New York banks,then you understand that the U.S. has led its allies by the hand like a bunch of morons.Prime Minister Harper and the rest of them are sending Canada into the pits and as far as I'm concerned,the whole gang in Ottawa is as right-wing as the former Bush Administration and just as stupid as well with tea-party like religious bigots controlling the Conservative Party.You can easily read more on that on

Tue, 10/23/2012 - 10:49 | 2912701 unrulian
unrulian's picture

Really...i can't disagree, however what's our alternative? NDP? a bunch of socialist former teachers and lawers who don't know anything real and have provided no productivity in their lives and have sucked the country dry with their fat pensioned bank accounts and union pushing. The Liberals? who will now be lead by Trudeau's panty waste coke addict son that couldn't hold his dads bird, that will do and say anything to try a get a pulse in thei rotting corpse of a liberal party?The Cons atleast scrapped the gun registry and are pushing needed austerity measures.... All of which in the end as you point out will fail as we are unfortunately entagled in the death sprial of the 400 trillion gorilla that resides just to the south,

Tue, 10/23/2012 - 10:08 | 2912536 DUNTHAT
DUNTHAT's picture

The Loonie Fundamentals according to the COT report ----

Tue, 10/23/2012 - 10:11 | 2912539 pitz
pitz's picture

Canada's economy is crashing and burning right now because of the popping housing bubble.  Not a chance in the world they will raise rates.   Next move is down.  Carney is bluffing.  Its pretty bloody obvious.

Tue, 10/23/2012 - 10:17 | 2912568 Village Smithy
Village Smithy's picture

It seems odd that the BoC governor thinks that consumer debt has maxed out and needs to be dealt with while Canada's largest bank is buying up consumer debt companies.

Tue, 10/23/2012 - 10:45 | 2912696 pitz
pitz's picture

It should be obvious to most observers that the banks are doing this to kill off any competition so they can raise spreads on the consumer lending products with impunity. 

Tue, 10/23/2012 - 13:03 | 2913125 OutLookingIn
OutLookingIn's picture

Complete and utter bullshit!

Core CPI at about 2%??? Bullshit!

Marky Boy obviously does not do his own grocery shopping!

John William's SGS has real inflation at 9.6% YoY and Canada is more expensive to live then the US.

Inflation north of the border is more "likely" over 10% YoY. Real estate is starting to sink faster.

No QE? More bullshit! The federal government of Canada backs the national mortgage market through the CMHC, Canada Mortgage and Housing Corporation, a government owned entity.

The Canadian consumer is staggering under massive personal debt and mortgage debt. Over 80% of the populace lives pay-check to pay-check. Talk about living on a knifes edge!

Tightening? Complete and utter bullshit. Not now. Not in the foreseeable future either! 

Tue, 10/23/2012 - 14:55 | 2913526 Stuart
Stuart's picture

Carney epitomizes "jawboning".   wait a month, he'll change his tune, again.   changes 6x a year.


Tue, 10/23/2012 - 14:56 | 2913527 silverserfer
silverserfer's picture

shake n bake!!!

Do NOT follow this link or you will be banned from the site!