Schembri comments in Winnipeg, MB

  • Higher debt levels, decline in interest rates, decreasing economic growth could challenge policy framework
  • If cyclical forces coming out of a downtrend are less powerful than historically because of demographics and debt, central banks might have to be more aggressive
  • BOC's 2% target is symmetric
  • Negative policy rates in some jurisdictions appear to be less effective in stimulating economic growth
  • Full speech

He doesn't really touch on the economic outlook here but it's safe to say that in the next downturn, the BOC will turn to QE before it thinks about negative rates.

"The cyclical forces that normally help to propel an economy out of an unexpected downturn, namely business and residential investment as well as purchases of large durable goods, may be less powerful, especially if debt levels are high and confidence is slow to rebound," Schembri said.