RENEWABLES: German Wind Output Forecast Comparison

Asked whether the BOC is considering another technical adjustment to deposit rates given continued strains in funding markets, and how the BOC views CORRA and liquidity in overnight repo markets, Deputy Gov Rogers says they have no plans to make adjustments or tweak balance sheet normalization plans:

• "The thing that's had sort of the most direct effect is we had a big maturity early in September, big bond maturity. And so there was a step down in the amount of liquidity in the markets that's put a bit of strain. I think the markets are still digesting that step down and adjusting we also, you'll recall, in our financial stability report, in May, we talked about a greater presence of foreign hedge funds in the market. They fund on the repo market. They fund government Canada securities on the basis trade. That trade goes, there's a bigger demand for that trade when there's an expected move in in policy rates, as there has been in the last few weeks. So so there's more than one thing affecting overnight markets. We've got a variety of tools that we can use."
• "We're not contemplating any change in the deposit rate right now... Our plan to normalize our balance sheet is still on track. It's the same as we've shared consistently all along. We do expect some of this turbulence as we get down to our steady state settlement balances, but we've got a variety of tools we can use before looking at the deposit rate."

Asked if the BOC might implement QE if the Canadian economy fails to recover, Macklem says: "we're a long way from even contemplating that. We've got considerable room with our policy rate." He says that even in their recessionary scenario published in the July monetary policy report, "I still think we'd be a long way from quantitative easing."

Asked at the opening of the post-decision press conference whether the new rate policy guidance was "rather cagey" because of a lack of conviction among BOC policymakers whether the easing in inflationary pressures is sustainable, Gov Macklem chuckles and says:

• "You're reading a lot into that...[while both a hold and a cut were considered] there was a clear consensus to cut our policy rate by 25 basis points... what tipped the balance really in favor of a cut this time was there was a clear sense that the balance of risk has shifted...the inflation picture hasn't really changed a great deal since where we were last January...earlier in the year, we saw some upward momentum in those core measures. If you look at the more recent monthly readings on the core measures, that that momentum has has come off. So yes, you know, if you look at the inflation data, there is some more comfort that some of those upward pressures we saw in underlying inflation are easing off."
• "The guidance really is we're not being as forward looking as normal, and we're paying close attention to the risks and uncertainties we demonstrated today. If those shift, we're prepared to take action."

MNI's Greg Quinn asks Gov Macklem whether the BOC is taking a risk cutting rates given elevated core inflation - Macklem repeats his earlier message: 

• "our primary mandate is to maintain low, stable inflation, and we are very focused on that....when we look at it, we see underlying headline inflation is 1.9%, underlying is running about 2.5%, some of that upward momentum we saw has eased off. So yes, we do need to consider where inflation is going at this point, inflationary pressures look a little more contained and against that background and the background of a weakening economy that will put additional downward pressure on inflation that tipped the balance of risks in favor of cutting our policy rate today. But we are proceeding carefully, we are going to be balancing those risks."

Asked what it would take to cut again in the fall, Macklem notes that "tariffs are weakening the Canadian economy "as evidenced by weakness in sectors directly-impacted by trade. And "Employment growth in the rest of the economy has now slowed. "

• "The reality is tariffs are increasing trade friction with our biggest trading partner - that has efficiency costs. Monetary policy can't undo that... what we can do is help the economy adjust while maintaining, while maintaining well controlled inflation. That's what we're focused on... it's going to be about balancing those risks. If the risks tilt, if the risks shift, we're prepared to take action, and if the risks tilt further, we're prepared to take more action, but we're going to take it one meeting at a time. We are taking a shorter horizon. We're being a little less forward looking than usual, and we'll make that risk assessment in October when we get there."

Ukrainian President Volodymyr Zelenskyy confirmed to reporters that Kyiv will receive air defence missiles for NASAMS and Patriot systems in the first US military aid package facilitated by the 'PURL' mechanism.

• Reuters reported yesterday that Undersecretary of Defense for Policy at the Pentagon, Elbridge Colby, “has approved as many as two $500 million shipments under the new mechanism called the Prioritized Ukraine Requirements List, known under the acronym PURL.” In total, PURL is expected to deliver roughly USD$10 billion in US weapons to Ukraine, funded by NATO partners in Europe via PURL.
• The Kyiv Independent notes, “Since taking office in 2025, U.S. President Donald Trump's administration has sold weapons to Ukraine or shipped deliveries authorized under former U.S. President Joe Biden. The new mechanism marks the first aid packages initiated during Trump's second term.”
• UK Prime Minister Sir Keir Starmer is expected to advance Europe’s case for stepping up pressure on Russia at a bilateral meeting with Trump at the Prime Minister’s Chequers residence tomorrow.
• Politico cautions against expecting any major breakthroughs but reports the two could strike an agreement on “lowering the price cap set on Russian oil, which the EU and U.K. have lowered while the US has not,” and Trump could “join European sanctions on individual Russian ships.”