CIBC CEO says no need for rate cut

As Canada’s economy continues to come out of a technical recession, experts are debating whether the BoC needs to further cut interest rates to help stimulate growth.

CIBC’s president and CEO Victor Dodig says, “I don’t think we need a rate cut. The Canadian dollar provides all the stimulus we need.”

He adds, “If we have a 0.25% cut, I think [our bank] could manage that. As it gets to 0%, it becomes more challenging.”

Dodig is one of several bank CEOs speaking at RBC Capital Markets Canadian Bank CEO Conference today in Toronto.

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Royal Bank CEO Dave McKay commented on the oil industry. He expects oil to start moving back towards the $50-a-barrel range — and maybe slightly above — over the next 18 months. “It’s a little softer than anybody predicted right now,” McKay says.

So far, however, McKay says Canada’s economic woes have been contained within oil-producing provinces, particularly Alberta, while other regions are being helped by a decline in the dollar’s value. “You’re seeing that weaker Canadian dollar drive great strength in B.C. … You’re seeing great strength in Toronto.”

Meanwhile, recent declines in the price of crude have spurred BMO to stress-test its oil and gas sector portfolio to see how it would perform at $25-a-barrel oil.

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BMO chief executive Bill Downe says the bank is also stress-testing its broader loan portfolios — which includes consumer mortgages, credit cards and auto loans — for an average of $35 a barrel over the course of the year.

For 2017, BMO is using $30-a-barrel oil for its stress tests, and for 2018 it’s considering the potential effects of a $40-a-barrel scenario. Crude oil futures are currently trading at about US$32 a barrel.

But how low will oil prices go? Morgan Stanley is predicting that the rising U.S. dollar could push Brent oil as low as US$20 a barrel, reports Bloomberg. Read more.

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.