Bank of Canada won’t follow Fed in issuing forecasts

OTTAWA — Bank of Canada governor Mark Carney has no intention of following the lead of his counterpart in Washington by publishing a forecast on future interest rates.

OTTAWA — Bank of Canada governor Mark Carney has no intention of following the lead of his counterpart in Washington by publishing a forecast on future interest rates.

The central banker said Wednesday he was more forthcoming about the direction of monetary policy during the recession, because markets and Canadians needed assurance of the bank’s intentions.

But now that the economic emergency is over for Canada, such extraordinary transparency is a bad idea.

“It is not our view that is the best policy, given all the other aspects we have to communicate to Canadians,” he said.

The bank publishes regular updates on economic performance and projections, as well future expectations for inflation, from which analysts and markets try to read into the mind of the central banker.

But that still leaves plenty of guesswork. Speculation was all over the map Tuesday after the central bank kept its policy rate unchanged at one per cent for the 16th straight month — most economists predicted rates would not rise until 2013, one chartered bank said not until 2014, and at least two prominent forecasters predicted a rate cut in the next few months.

When it announced its intention a few weeks ago, the U.S. Federal Reserve said it wanted to give greater confidence to business and households to encourage investment and spending.

But Carney said given the uncertainty in the world, it may not be fair for the Bank of Canada to signal a direction for rates.

“There’s a sense of false precision that can come from a single (forecast),” he said. “We don’t want people caught by previous language, previous guidance of the institution, as opposed to reacting to new facts on the ground and new outlooks.”

TD Bank chief economist Craig Alexander said there is some merit in a central bank being transparent, “up to a point.”

“There is also a sense that it can be useful for the central bank to surprise people,” he added. Alexander said too much transparency can sometimes induce market participants to take on too much risk, as happened during the lead-up to the 2008 financial market meltdown.

He added that the Fed is in a different world than the Bank of Canada, given that the U.S. economy is still on its knees and credit is remains tight.

“The Fed is an exceptional environment and they are trying to shape market expectations,” he said.

Just Posted

Central Alberta wildlife rehab facility not prepared to take orphaned bear cubs, yet

It’s been about eight years since the Medicine River Wildlife Centre was… Continue reading

Regional sewage line moving ahead despite concerns

Cost sharing among concerns of municipalities involved in Sylvan Lake-to-Red Deer sewage line

Red Deer family who lost everything in house fire begin rebuilding

Couple had moved into north-end home only two days before basement fire

Tory Leader Andrew Scheer says he doesn’t feel betrayed by Maxime Bernier

MONTREAL — Andrew Scheer says he doesn’t feel betrayed by former Tory… Continue reading

Humboldt Broncos player transferred to Calgary hospital for rehabilitation

CALGARY — One of the Humboldt Broncos hockey players injured in a… Continue reading

WATCH: Central Alberta pharmacists decry fee reductions for services

Government funding cuts to Alberta pharmacies will hurt health care, declared about… Continue reading

Supreme Court ruling corks B.C. vintners’ hopes for free trade of Canadian wines

VANCOUVER — The Supreme Court of Canada ruling upholding interprovincial trade laws… Continue reading

Lance Armstrong settles $100M lawsuit with U.S. government

Disgraced cyclist reached $5-million settlement with sponsor U.S. Postal Service

Montreal couple hoping city lets them keep beloved pet pig named Babe

MONTREAL — Babe the pig spends his days sleeping, going for walks… Continue reading

WATCH: This is a story about a stoned raccoon at a fire station

An unusual pair showed up in the pre-dawn hours at Fire Station… Continue reading

Plastic makers’ credit ratings may be hit by pollution rules

Plastic packaging makers may be less credit-worthy in the future as governments… Continue reading

Black Press Media acquires two new Alaska newspapers

New Media Investment Group to acquire the Akron (OH) Beacon Journal while Black Press Media takes on daily newspapers in Juneau and Kenai Alaska

‘Dining of the future’: vegan restaurant boom fuelled by meat eaters

Foodies say Canada is in the midst of a renaissance in plant-based… Continue reading

Northbound QEII traffic to return to northbound lanes as contruction continues south of Red Deer

Though the Hwy 2/Gaetz Avenue interchange still has months until completion, some… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month