Governor of the Bank of Canada, Stephen Poloz, released his opening statements prior to the House of Commons Standing Committee on Finance, intimating that the central bank will endeavour to be more clear and accountable for any actions they may make.
“We are modifying the Report’s format and style in order to explicitly capture the uncertainty that is inherent in our outlook,” Poloz said in the statement. “The goal is to present to Canadians a reflection of the evolution of the risks to the inflation outlook that are embedded in our policy, rather than simply compare a snapshot of the current forecast with that of our previous forecast.”
Noting that communications are often unclear, the Bank of Canada has added two new features to help clarify its outlook.
“The picture is not always perfectly clear and so we have added new measures of ex ante, or before the fact, uncertainty to our five most critical projection variables,” Poloz said. “We have added ‘rule of thumb’ ranges around the base-case projection for the growth of Canadian and U.S. GDP and for Canadian total CPI inflation, as well as for the current level of the output gap and the growth rate of potential output in Canada.”
Poloz also touched on the state of the housing market, expressing optimism that the market will eventually normalize.
“While household spending remains solid, and various indicators in the housing sector continue to rise, slower growth of household credit and higher mortgage interest rates point to a gradual unwinding of household imbalances.”
Of course, any statement by the Bank of Canada these days isn’t complete without mention of the historically-low overnight rate, which is expected to be held for the foreseeable future.
“The Bank judges that the substantial monetary policy stimulus currently in place remains appropriate and last week decided to maintain the target for the overnight rate at 1 per cent,” Poloz said.