Kevin Carmichael: The signs were there even before Friday\u0027s game\u002Dchanging speech
, near a modern low, and the consumer price index averaged year-over-year increases of 5.4 per cent over the first two months of the year, compared with the Bank of Canada’s January forecast of 5.1 per cent in the first quarter. That outlook preceded Russia’s invasion of Ukraine, which has destabilized the supply of oil, natural gas, agricultural staples and metals. “The result is inflation in the near term that is expected to be higher than we projected in January,” Kozicki said.
Still, many of the men and women who get paid to predict where interest rates are headed still were hedging their bets at the start of last week, perhaps because Macklemthat he and his lieutenants “fully intend to tighten policy in a deliberate and careful way, being mindful of the impacts and monitoring the effects closely.
Under Stephen Poloz, the previous governor, the Bank of Canada moved away from pointing Bay Street and Wall Street in the direction of where interest rates were headed. Poloz believed professional investors and analysts had started putting more effort into reading between the lines of central bankers’ speeches, depriving markets of the kind of rigorous analysis that ensures price discovery. Bay Streetwhen the Bank of Canada cut the benchmark interest rate in January 2015 without any notice.
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