Ahead of last week’s interest-rate announcement, I talked to a Bay Street economist who wondered how much credibility would factor in the Bank of Canada’s decision. Quite a lot, as it turned out.
“It’s always top of mind,” Stephen Poloz, the governor, told me in an interview after the Canadian central bank raised the benchmark rate for the first time in six months on July 11. “If you were thinking about doing something differently, your explanation would (have to) be very rigorous because you’d be thinking, ‘Well, my credibility is at stake if people think, ‘oh that’s just smoke.’’ You can’t put out something that’s just smoke. No one is going to buy it. So you need to have really good reasons for whatever it is you do or don’t do.”
Continue reading at the Financial Post ...