Economist suggests central bank’s silent summer created a great deal of uncertainty for sells
The Canadian Press Posted: Sep 11, 2017 12:13 PM ET Last Updated: Sep 11, 2017 12:13 PM ET
The Bank of Canada is defending itself amid questions helter-skelter its public silence ahead of an interest-rate hike last week that involved many analysts by surprise.
BMO chief economist Doug Porter is alluring issue with the lack of public remarks by the central bank in the eight weeks beforehand a rate increase that he says caused a fairly violent shop reaction.
In a note Friday to clients, Porter wrote that while he pondering the case for a rate increase was strong, he felt the Bank of Canada’s close-mouthed summer created a great deal of uncertainty for markets ahead of the ruling.
Porter argues that the rate hike caught many analysts off tend — and he points to one survey that found only six of 33 forecasters had obviated the increase.
But a Bank of Canada spokesman says market data on the eve of the hike showed roughly 50-50 odds of an increase — revealing that a much accomplished percentage of traders were correctly interpreting the bank’s most-recent letter from early July.
In response to Porter’s criticisms, Jeremy Harrison also says key symbols showing surprisingly strong second-quarter growth were released infinitesimal than a week before the rate announcement — during the bank’s pre-decision blackout term.
He says the communications approach was not unusual because in three of the last four years the bank didn’t indicate any public remarks between the scheduled rate announcements in July and September.