The New Governor May Be A Surprise, But The Bank’s Role Is Firm: Globe And Mail Op-ed

Published in the Globe and Mail on May 3, 2013

By William Robson

The announcement that Stephen Poloz will succeed Mark Carney as Governor of the Bank of Canada was a surprise – senior deputy governor Tiff Macklem was a strong internal candidate for the position – but no shock.

Mr. Poloz was a leading outside candidate from the moment the search for a successor to Mr. Carney began. Not only had he spent 14 years at the Bank of Canada, rising to head its research department, but his subsequent experience – most notably at Export Development Canada, which he has led since 2011 – developed his contacts in the business world and his management capacity. He is personable and an able communicator – key assets in any job,…

Monetary Apocalypse: Financial Post Op-Ed

Published in the Financial Post on February 15, 2013

By Finn Poschmann

As G20 finance ministers and central bankers converge in Moscow Friday, intending either to abate or stoke a burgeoning currency war, they will confront fallout over recent actions by Japan’s new and rather odd government, led by Shinzo Abe.

After decades of low growth, low or negative inflation and pummelled asset values, Prime Minister Abe has quite reasonably been talking up inflation and talking down the yen, and firmly nudging the Bank of Japan to encourage as much. And the yen has quite reasonably responded by taking a long dive since Mr. Abe’s December election. Trouble with that is Japan is in the G20 and the G7, where competitive…

Thank Carney And Horseshoes For Canada’s Stellar Performance: Globe And Mail Op-ed

Published in the Globe and Mail on February 13, 2013

by Finn Poschmann

Last Friday’s non-bubbly housing start numbers and weak employment data should not distract Canadians from two key points. First, after a short, sharp economic shock, Canada’s economy began its recovery in late spring 2009 and has hardly paused since. Second, in comparison with the U.S., the EU, and especially the U.K, Canada’s performance has been stellar.

Canada’s performance certainly bought attention in the U.K., where some of the credit has rightly landed in the lap of Bank of Canada Governor Mark Carney.

Last week, Mr. Carney landed in London for a public pre-entry interview by the House of Commons treasury committee, which wanted to…

Seeking Financial Stability: The Best Role for the Bank of Canada

Why interest rates must rise: Canadian Business Op-Ed

Published in Canadian Business on October 29, 2012 (posted on the Canadian Business website on Oct. 16, 2012)

By William Robson

Central bankers responded to the 2008 crisis with massive support for the world’s financial system. These bold moves made heroes of U.S. Fed chairman Ben Bernanke, Bank of Canada governor Mark Carney, and their colleagues overseas. Four years later, however, major economies are still struggling. There is a troubling sense the heroes have lost their touch.

The Fed’s September pledge to keep interest rates ultra-low until the U.S. economy gets moving included a commitment to buy more long-dated government bonds and mortgage securities to push long-term yields down. Commentators and…

The euro-loonie: Financial Post Op-Ed

Published in the Financial Post on June 5, 2012

By Finn Poschmann

What makes a good currency area?

It was a popular question in the 1990s and later. Political leaders in France and Germany were convinced they knew the answer: Whatever was the definition of a good currency area, the two of them had to be in one, along with their economically and politically similar geographic neighbours.

Their counterparts in southern Europe knew that whatever the answer was, they wanted to be in one, too; and in the United Kingdom, the government knew that whatever the answer was, they did not. Elected princes in Denmark pondered whether to be, or not to be, part of the euro, gave up, and asked their voters — who said no.…

Money Still Talks – Is Anyone Listening?

Few options for European Union: Financial Post Op-Ed

Published in the Financial Post on May 8, 2012

By Finn Poschmann

Based on the results of elections in France and Greece, the odds of a euro currency implosion have gone up.

The outcomes of loud, divisive and ostensibly important elections in Europe have rolled in.

In France, the charming and occasionally conservative Nicolas Sarkozy fought a losing rearguard action against the steady assault of his Socialist challenger for the presidency, François Hollande. Sarkozy’s loss signals the obstreperous French electorate’s rejection of post-crisis fiscal austerity measures, measures set in motion by Sarkozy and which, for the most part, they have yet to experience.

Perhaps more than that, the result signals…

Bank of Canada should offer forecasts on its key rate: Financial Post Op-Ed

Published in the Financial Post on March 8, 2012

By Pierre L. Siklos

The Bank of Canada is widely expected to announce Thursday that it is leaving its target for the overnight interest rate unchanged at 1%. Beyond this announcement, however, the future value of the overnight rate, and of other rates that tend to move in tandem, such as mortgage rates, look much more uncertain. In the hope of getting a glimpse into the bank’s thinking about the future, monetary-policy watchers will carefully analyze the language of its communiqué, the source of clues about what the bank might do next.

Meanwhile, in the United States, monetary-policy watchers just got a valuable new tool in their hunt for clues about where interest…

Financial Stability: The Next Frontier for Canadian Monetary Policy

A Slippery Concept: Financial Post Op-Ed

Published in the Financial Post on November 10, 2011

By Philippe Bergevin and Finn Poschmann

This past Tuesday, the government and the Bank of Canada announced that the bank’s operating framework would be renewed for another five years. The bank’s main objective will continue to be keeping inflation, expressed as the 12-month rate of change in the consumer price index, near the 2% midpoint of the 1% to 3% inflation-control range — business as usual, it seems.

The announcement referred, however, to “Canada’s flexible inflation-targeting framework,” and what is new is the word “flexible” — perhaps business is not so usual. The concept of a flexible framework is slippery, and potentially dangerous, and one that risks…

The Roads Not Taken: Why the Bank of Canada Stayed With Inflation Targeting