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HIGHLIGHTS-Bank of Canada's Macklem and Wilkins speak after rate decision

·3 min read

TORONTO, Oct 28 (Reuters) - Below are some key quotes from a news conference by Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Wilkins on Wednesday after the central bank held interest rates steady.

MACKLEM ON NEGATIVE INTEREST RATES

"In the current situation it's not something that we think would be very helpful, in fact it could be disruptive. But it is in the tool kid and if the situation were to dramatically change, it is something we could consider. That's what I meant by 'never say never.' The bar would be very high to do that and it is not something we are currently discussing. It is not something we discussed at our most recent policy deliberations."

MACKLEM ON "LONG SLOG"

"What we're saying is we're going to get through this but it's going to be a long slog. We're telling Canadians - and our forward guidance has been very clear - that we're going to hold our policy interest rate at the effective lower bound until slack is absorbed so that we can sustainably achieve our 2% inflation target."

MACKLEM ON LONGEVITY OF LOW INTEREST RATES

"If you are a household considering making a major purchase, if you're a business considering investing, you can be confident that interest rates will be low for a long time."

MACKLEM ON BOND PURCHASES

"If you look in the monetary policy report, you can see that a lot of our balance sheet is under two years. We will be shifting to three, five, 10, 15, some at 30 (years) as well. If you look at where households and businesses borrow, those are the maturities where they typically borrow. By targeting those, we can lower the term premiums that they borrow at, and increase the effectiveness of our program."

MACKLEM ON QE RECALIBRATION

"This adjustment is about maximizing the effectiveness of the program. As I indicated, with our forward guidance yields at the short end of the curve are very well anchored. We don't need to buy the short end and so we can get out of the way of the market at the short end and shift to buying more longer maturities and in doing so increase the monetary policy stimulus from quantitative easing per dollar purchased."

MACKLEM ON SCOPE TO DO MORE QE

"Our balance sheet, it has grown rapidly but it remains much smaller than a number of other leading central banks relative to the size of our economy. So there is scope to do more and if we need to do more we will do more."

WILKINS ON FORWARD GUIDANCE

"The discussion about forward guidance was quite robust within governing council. It took a while because we were really concerned about, or focused on, what are we trying to achieve with this. And we all agreed at a time of uncertainty for Canadians that it was really important to be as clear as possible about how we saw the outlook and what that might mean, given the outlook for borrowing costs that are very important for Canadian households and businesses." (Reporting by Fergal Smith, Nichola Saminather and Moira Warburton Compiled by Denny Thomas)