Op-Eds
Published in the Financial Post on May 29, 2013
By Paul Beaudry and Philippe Bergevin
In its last rate announcement with Mark Carney at the helm, the Bank of Canada unsurprisingly left short-term interest rates at 1%. Good news for borrowers; not so good for savers.
As has become its habit, the Bank also reminded us that rates won’t stay low for ever; they’ll stay where they are for “a period of time.” Inevitably, interest rates will go up, and eventually return to more normal levels. The question is: What will the new normal level look like?
Historically, the normal – or “neutral” in economic jargon – rate has been about 4%, but it varies over time. Over the coming decade or so, our assessment is that…
Published in the Globe and Mail on May 29, 2013
By Christopher Ragan
Mark Carney gave his last public speech as Governor of the Bank of Canada last Tuesday, and used that opportunity to speak about how well “Canada works.”
He spoke about the success of monetary and fiscal policy during the financial crisis, and about Canada’s resilient financial system. He explained how Canada’s monetary union – unlike the one in Europe – has many essential characteristics that make it effective, such as labour mobility, fiscal transfers among regions, and relative wage flexibility. It was a good speech; sensible and clear.
The problem came at the end when Mr. Carney said “the challenge for Canada is to rotate the sources of…
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,…
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…
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…
