Op-Eds
Bank of Canada Governor Stephen Poloz’s speech in Ottawa on Thursday got lots of attention. As usual, analysts and traders parsed it for clues about short-term interest rates. Economists noted the Governor’s compelling arguments for letting the Canadian dollar’s external value move as circumstances change. Less happy, however, is the intense focus on Mr. Poloz – and other central bankers – as masters of economic growth. Engineering sustainable increases in living standards is a task for which he and his counterparts around the world could really use some help.
On interest rates, the Governor’s speech highlighted the divergence between the U.S. Federal Reserve Board, responding to economic expansion by tightening, and other…
By Finn Poschmann and Aaron Jacobs
The Bank of Canada should improve its inflation analyses to better account for costs such as housing
Since spring 2009, consumer prices as measured by Statistics Canada’s all-items consumer price index, have gone up by about 12 per cent.
That means that over the long haul, the Bank of Canada seems to have done a pretty good job of hitting the 2 per cent annual inflation target it agreed on with the Government of Canada a generation ago. Good thing, too, as the agreement is up for renewal in 2016.
Which raises a question, about whether we have got right the measure of inflation to use in assessing monetary policy’s performance. Statcan’s CPI, for instance, has a component…
Published in the Globe and Mail on July 15, 2015
Steve Ambler is David Dodge Chair in monetary policy at the C.D. Howe Institute and professor at the University of Quebec at Montreal.
The Bank of Canada’s decision to cut its overnight rate target to 0.5 per cent was expected by many in the wake of the disappointing economic news that’s come since the previous announcement in May. Instead of “a return to solid growth in the second quarter,” as the bank predicted then, gross domestic product growth for the entire second quarter may have been negative.
he bank weighs many factors before making a decision on the overnight rate target. The two main ones are the rate of inflation itself and excess capacity…
Published in the Financial Post on July 9, 2015
By Philip Cross
Philip Cross is a Research Fellow at the C.D. Howe Institute.
Lower interest rates “cause pervasive mispricing in financial markets”
The Canadian and U.S. economy’s unexpected weakness early in 2015 is fanning speculation about lower interest rates, after the Bank of Canada’s surprise cut in mid-January. Before listening to these siren calls for ever more monetary policy stimulus, it would be wise to read the recent annual report of the Bank for International Settlements, the Swiss-based bank for the world’s central banks. Beholden to no government, the BIS speaks with a refreshingly candid, clear and unconventional voice.
The…
Published in the Financial Post on June 25, 2014
By Paul Jenkins and David Longworth
Paul Jenkins is a former Senior Deputy Governor, and David Longworth a former Deputy Governor, at the Bank of Canada. They are also Senior and Research Fellows at the C.D. Howe Institute.
High and rising household debt is raising red flags. In its June Financial System Review, the Bank of Canada evaluated risks to financial stability associated with household financial stress and a sharp correction in housing prices, and came to the conclusion that the impact of these risks stood at the highest level among those it assesses.
What can be done to address such vulnerabilities and risks? We believe that they should…
