During a speech in the Canada-UK Chamber of Commerce in London Thursday, Polos was asked whether the credibility of the central bank should be called into question following the surprise move.
“It probably won’t come as a surprise to you that I would say no,” he told the audience, according to the Financial Post. “Central banks are doing their jobs in a very challenging setting.”
Poloz did, however, admit that the Bank of Canada knew the rate cut would come as a surprise to industry professionals and investors alike.
“We knew that financial markets would be surprised by the move in January, and we generally prefer to avoid surprises,” Poloz said. “But we will do what is necessary to fulfill our inflation-targeting mandate.”
In late January, the BoC announced it was lowering its target for the overnight rate by one-quarter of one percentage point to 3/4 per cent. It said the move was in response to plummeting oil prices.
The Governor of the Bank of Canada Stephen Poloz has gone into damage control mode, defending the bold actions carried out by the BoC in January when it shocked the market with a rate cut.