There was some commotion after the Bank of Canada’s last policy announcement. A good number of the central bank’s closest observers over-interpreted the October 19 interest-rate statement and Governor Stephen Poloz’s prepared remarks to reporters, which he and Senior Deputy Governor Carolyn Wilkins use to provide context. Poloz revealed the committee “actively discussed” lowering interest rates, which caught some off guard. The dollar went for a tumble, and flat-footed analysts were unhappy about it.
It should be smoother this week. The Bank of Canada will make its last scheduled policy decision of 2016 on December 7. There will be no press conference, so no additional verbiage for market participants to digest: just a simple statement of around 400 words. For the central bank, nothing much has changed in the past six weeks. That may sound odd given recent events, but the election of Donald Trump will have had little impact on the Bank of Canada’s deliberations. Poloz, Wilkins and the other members of Governing Council will have concerned themselves with what the latest data say about the future course of inflation. Those indicators suggest the economy is about where the central bank thought it would be at the end of 2016. Trump could eventually have a dramatic effect on Canada’s prospects. However, inauguration still is more than a month away. As Poloz has said numerous times, the Bank of Canada doesn’t make decisions based on hypothetical scenarios.
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