Bank of Canada Governor Stephen Poloz dislikes being asked to pass judgment on each and every economic indicator that Statistics Canada releases. “I don’t usually have a running commentary on these things,” he told a few reporters who gathered around at the International Monetary Fund in Washington on Friday evening.
But it is not every day the central bank’s key measure of inflation surges to its fastest rate in more than six years — precisely what the “core” rate had done earlier that day. Normally, such an increase would portend higher interest rates. Poloz has no desire to raise interest rates, so the surge in prices had to be put in context in case anyone gets the wrong idea.
“The fundamental forces on inflation are downward, not upward,” Poloz said.
It was the latest example of Canada’s central bank governor having to explain why all the things we thought we knew about monetary policy no longer hold — at least for now. Perhaps the greatest challenge facing central bankers is convincing the public they know what they are doing.
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