But as Canadian net foreign assets rise, the wealth effect on consumption will become large enough to support demand and to allow the Canadian dollar to rise to a permanently higher real value than prior to the change in fiscal policy.
Ladies & Gentlemen, Central Bank communication is important for financial market participants as it forms the basis for their extrapolations regarding current and future policy actions that might impact the value of their financial assets. So far, communication between the Central Bank and financial markets has worked fairly well. Market participants have learnt over time to distinguish between information and “noise”.