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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

COVID-19. (Image courtesy CDC)
Alberta reports 1,731 new COVID-19 cases on Saturday

The province’s central zone has 992 active cases

Collin Orthner, manager at McBain Camera in downtown Red Deer, stands behind the store’s counter on Saturday. (Photo by Sean McIntosh/Advocate staff)
A few Red Deer businesses happy with Black Friday results

While this year’s Black Friday wasn’t as successful as it was in… Continue reading

Le Chateau Inc. is the latest Canadian firm to start producing personal protective equipment for health care workers, in a July 3, 2020 story. (Photo by THE CANADIAN PRESS)
Hundreds of millions of dollars for frontline workers yet to be released, says Alberta Federation of Labour

Information recently released by the Alberta Federation of Labour suggests more than… Continue reading

Red Deer RCMP say a 30-year-old man faces sexual charges against a teen. (File photo by Advocate staff)
Man killed in two-vehicle collision near Penhold, says Blackfalds RCMP

A 46-year-old man is dead following a two-vehicle collision on Highway 42… Continue reading

Banff National Park. (The Canadian Press)
Study finds train speed a top factor in wildlife deaths in Banff, Yoho national parks

EDMONTON — A study looking at 646 wildlife deaths on railway tracks… Continue reading

Cows on pasture at the University of Vermont dairy farm eat hay Thursday, July 23, 2020, in Burlington, Vt. Canadian dairy farmers are demanding compensation from the government because of losses to their industry they say have been caused by a series of international trade deals. THE CANADIAN PRESS/AP-Lisa Rathke
Feds unveil more funding for dairy, poultry and egg farmers hurt by free trade deals

OTTAWA — Canadian egg and poultry farmers who’ve lost domestic market share… Continue reading

Chief Public Health Officer of Canada Dr. Theresa Tam speaks during a news conference on the COVID-19 pandemic in Ottawa, on Friday, Nov. 20, 2020. Canada's top doctor says the country is still on a troubling track for new COVID-19 infections as case counts continue mounting in much of the country. THE CANADIAN PRESS/Justin Tang
COVID-19 cases in Canada remain on troubling course, Tam says, amid rising numbers

Canada’s top doctor says the country is still on a troubling track… Continue reading

hay
Hay’s Daze: Giraffe knows filling wishes can sometimes be a tall order

Last weekend, I had a lovely breakfast. “So what?” you may say.… Continue reading

A person enters a building as snow falls in Ottawa, Sunday, Nov. 22, 2020. Ottawa has been successful in limiting the spread of COVID-19 during its second wave thanks to the city’s residents who have been wearing masks and staying home, said Ottawa’s medical officer of health Dr. Vera Etches. THE CANADIAN PRESS/Justin Tang
People to thank for Ottawa’s success with curbing COVID-19: health officer

The city’s chief medical officer said much of the credit goes to the people who live in Ottawa

NDP Leader Jagmeet Singh asks a question during question period in the House of Commons on Parliament Hill, in Ottawa, Thursday, Nov. 26, 2020. NDP Leader Jagmeet Singh says tonight's public video gaming session with Alexandria Ocasio-Cortez is about reaching young people where they hang. THE CANADIAN PRESS/Sean Kilpatrick
NDP leader stoked over ‘epic crossover’ in video gaming sesh with AOC

Singh and AOC discussed importance of universal pharmacare, political civility, a living wage

A south view of the Ward Hunt Ice Shelf breaking apart is seen from Ward Hunt Island, Nunavut, in an Aug. 20, 2011, handout photo. The remote area in the northern reach of the Nunavut Territory, has seen ice cover shrink from over 4 metres thick in the 1950s to complete loss, according to scientists, during recent years of record warming. Scientists are urging the federal government to permanently protect a vast stretch of Canada's remotest High Arctic called the Last Ice Area. THE CANADIAN PRESS/HO-CEN/Laval University, *MANDATORY CREDIT*
Scientists urge permanent protection of Last Ice Area in Canada’s High Arctic

Tuvaijuittuq has the thickest and oldest ice in the Arctic

In this file photo, a lotto Max ticket is shown in Toronto on Monday Feb. 26, 2018. (By THE CANADIAN PRESS)
No winning ticket for Friday night’s $55 million Lotto Max jackpot

No winning ticket was sold for the $55 million jackpot in Friday… Continue reading

Most Read