QUOTES-Top Bank of Canada officials speak after latest interest rate cut

TORONTO, Jan 29 (Reuters) - Below are some key quotes from a news conference by Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers on Wednesday after the central bank cut its key policy rate by 25 basis points to 3%.

MACKLEM ON C$:

"Has the movement in the Canada-U.S. exchange rate constrained our monetary policy decisions to this point? The answer is no."

"The recent depreciation we've seen in the Canadian dollar has been more driven, in our view, by trade uncertainty and particularly President (Donald) Trump's threats to impose 25% tariffs on Canadian exports ... if you look at the timing of the (C$) depreciation, it follows very closely on President Trump's threats."

"This is a more material move in the Canadian dollar ... If you go back to October, Canadian dollar was 73-74 cents ... It's now 69 to 70. So look, that is a material depreciation, and it will start to have some impacts."

"There's no doubt the exchange rate is responding to the threat of tariffs, and I think it's reasonable to expect that as developments unfold that will be financial markets will take that on board. It'll be reflected, and that is something that we will have to build in to our outlook. And obviously, the bigger the movements in the Canadian dollar, the more we're going to have to take those into account as we set policy going forward."

MACKLEM ON USING QUANTITATIVE EASING:

"We're a long way from needing quantitative easing. I mean, our policy rate is at 3%.

We have recently published a review of our use of our extraordinary tools during COVID and what we concluded was that, the bar for using quantitative easing in Canada has always been very high. In fact, we've only used it once when we had a once in 100- year pandemic.

The bar for using quantitative easing should remain very high going forward. So we're a long way from that and we have plenty of room with our policy rate."

MACKLEM ON THE TARIFF THREAT'S IMPACT ON RATE DECISION:

"You look out the window and the threat of tariffs is there. There's no doubt that weighed on our decision."

"The more we can get the economy on a solid footing before it faces new tariffs the better. From that risk management perspective, that reinforced the decision to cut the policy rate by 25 basis points."

MACKLEM ON SUPPORTING GROWTH:

"If the weakness on the economy that comes through as a result of tariffs, the downward pressure that's putting on inflation comes faster and is bigger than the upward pressure, then monetary policy I expect will be focusing more on supporting growth."

"On the other hand, if the inflationary pressures come through faster and are bigger, monetary policy is going to have to be more focused on guarding against persistent inflation."

MACKLEM ON INFLATION DUE TO TARIFFS:

"A big increase in tariffs will have an initial effect on prices. It'll push them up, and that will push inflation up... given the lags in monetary policy there is not much we can do about that.

What we don't want to see though is we don't want to see that initial price level increase start to feed through broadly to other prices and wages, and then become persistent inflation. So that is a key thing that we will be focused on. Inflation will go up, but we want to make sure it comes back down to the 2%. (We want to make sure) this shock does not create persistently higher inflation. That won't be good for Canadians.

MACKLEM ON FORWARD GUIDANCE:

"Forward guidance has its uses, but it has to be used very carefully and with the benefit of hindsight. In retrospect, we should have been clear about the exit clauses, the conditions under which this would hold. And I think, yes, in the process of communicating it, those conditions weren't as clear as they should have been."

MACKLEM ON BANK OF CANADA'S ROLE IN RESPONDING TO POSSIBLE U.S. TARIFFS:

"Monetary policy can't offset the effects of higher tariffs. Economic activity will be lower. We'll be producing less in Canada. We will be earning less. What it can do is sort of smooth that adjustment so it's less abrupt than it otherwise would be, and we will certainly do everything we can to be a source of stability."

MACKLEM ON REMOVAL OF RATE GUIDANCE LANGUAGE:

"There's a lot of uncertainty out there, and it just didn't seem very useful to provide guidance."

SENIOR DEPUTY GOVERNOR ROGERS ON REACTING TO INFLATION SPIKE

"Initially, tariffs present a one time price increase but they can reverberate, just like we saw things reverberate in COVID. So that's exactly the scenario that we would be wanting to guard against, and why we would need to react if inflation takes off. If the inflation forces are stronger than the downward forces on growth, and then it seems clear what we would need to do."