BOC: Gov Macklem: Likelihood Of "Extreme" Trade War Scenario Has Come Down

Asked about how the economy is playing out relative to the two forecast scenarios in the April MPR, Gov Macklem says: 

• "We're somewhere between the two scenarios, but it's still a moving target. And you know, we'll we'll have to see where things go....since April, the likelihood of scenario two, which is a pretty extreme, protracted, severe trade war - the likelihood of that does appear to have come down somewhat... I hope the situation becomes clear and we can go back to a more usual forecast, or at least a central scenario with with some some risks, but that's really going to depend on on how things play out."
• A little more commentary than usual on CAD in the BOC press conference. Macklem says re FX impact on goods imports inflation: "some of that [previous] depreciation may also be coming through the goods prices we're seeing now, because it takes some time for that to get passed through. As [Deputy Gov Rogers] suggested, that's now going to - if the assuming the dollar stays 70 to 73 cents - that'll start to work in the other direction."
• Asked if consistent uncertainty tilts the BOC toward a rate cut, Macklem says: "when the Governing Council deliberated about the future path for interest rates on balance, different members had somewhat different perspectives. It's not surprising, particularly given the uncertainty, there's going to be some diversity of views about how things are going to play out and what that means. But on balance, Governing Council thought that if this uncertainty continued, if US tariffs continued, and that continued to weaken the Canadian economy, and if the cost pressures coming through on inflation were contained, yeah, there could be a need for a further reduction in our policy interest rate."