Bank of Canada Governor Stephen Poloz sees himself as the captain of a team of policy makers, not the chief decider. He offered some symbolic evidence of that Wednesday after he and his deputies on the Governing Council opted to leave the benchmark lending rate unchanged at 0.5%. At the press conference that followed, Poloz had his assistant captain read the opening statement, a moment in the spotlight that usually is reserved for the governor. Carolyn Wilkins, the talented, yet underexposed, senior deputy was given the first opportunity to explain why a weaker outlook for economic growth in 2016 may not be as bad as it seems. “Canada’s non-resource economy is doing much better,” she said, adding later that “the bottom line is that economic momentum is building in Canada.”
Before taking questions, Wilkins turned to her boss and asked if he had anything to add. It turned out he did. In what appeared to be unscripted remarks, Poloz reminded those watching that it takes six to eight quarters for an interest-rate adjustment to affect the economy. So the Bank of Canada’s quarter-point cuts in January and July have yet to work all of their magic. “We probably haven’t seen half the effect of those cuts,” he said. “We need to be patient and let monetary policy do its work.”
These maneuvers and messages may seem inconsequential. They aren’t.
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