The Bank of Canada's recent focus on the dangers to the economy of low oil prices may well prompt it to cut interest rates again. At only 0.75% now, however, the scope for additional interest rate cuts is limited. If economic conditions become dire, the Bank would need to consider other ways of stimulating the real economy. Rather than turning to quantitative easing as other central banks have done, however, the Bank appears to favour launching a new and much bolder version of forward guidance.
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