Don Curren 🇨🇦🇺🇦1 Desjardins: The Bank of Canada’s reaction function to higher #energyprices is also fairly clear. Even in a world where #centralbanks are more sensitive to supply shocks, the Governing Council retains substantial flexibility to remain patient. 🧵
#BankofCanada #BOC #cdnecon
2 Desjardins: Policymakers will generally look through an #oilpriceshock unless #inflationexpectations become unanchored, underlying #inflation reaccelerates or the #outputgap closes meaningfully. 🧵
#BOC #cdnecon
3 Desjardins: At this stage, it’s too early for #centralbankers to conclude any of those conditions are materializing. That’s particularly true in light of the recent deterioration in #labourmarket conditions & very muted #inflation readings. Beneath the surface, the labour market looks even weaker.