US STOCKS: Early Equities Roundup: Off Week's Record Highs, IT Weaker

In the final question of the BOC press conference, asked if future Federal Reserve cuts will affect the BOC's rate path, Macklem says the BOC will "watch closely what the Fed does":

"we have a flexible exchange rate so that we can gear monetary policy to the needs of the Canadian economy. I'm confident the Federal Reserve will gear monetary policy to the needs of the US economy. We've obviously reduced interest rates quite a bit more than the Fed. Our economy was was weaker through last year. As we reduced rates, we were seeing, actually, economic activity pick up with inflation around 2%. Of course, the situation has changed with new US tariffs. But yes, we'll watch closely what the Fed does, and that's something that we will take into account in terms of our own monetary policy. But I think the best thing the Fed can do for us is to do a good job managing monetary policy in the United States."

Gov Macklem says that incoming data suggests the Canadian economy overall is weaker but not "sharply weaker" amid the US-Canada trade conflict (the policy statement noted "the economy is showing some resilience so far"):

• "When we say the economy is showing some resilience overall, what we're saying is that when you look beyond the directly-affected trade sensitive sectors, and you look at the rest of the economy, it is continuing to grow. If you look at employment outside of sectors heavily dependent on the US. Employment in the rest of the economy has continued to expand, as I mentioned in a previous question. You know, consumption growth is modest, but it is continuing to grow. So look, the economy is weaker, but it's not sharply weaker. It is showing, it is showing some resilience so far.... hopefully we move more towards a de-escalation scenario and we get a stronger bounce back in growth than we have, than is in the current tariff scenario. But you know, we've got to be alive to the possibility that, you know, that's not the only possible outcome."
• On the BOC's balance sheet policies, Deputy Gov Rogers says that plans haven't changed: "our plan that we've shared in previous press conferences on settlement balances hasn't changed. We're on a continued trajectory down. We still think we'll settle somewhere between 50 and $70 billion at the end of the day. We're getting closer to that number, but we've got a ways to go. The bottom line is, we don't have any change to our plans right now."

• BOC'S ROGERS SAYS BALANCE SHEET PLANS UNFOLDING AS EXPECTED
• BOC DOESN'T WANT A TARIFF PROBLEM TO BECOME INFLATION PROBLEM