The Bank of Canada’s new policy statement is barely 400 words in length. This review of the March 9 decision will struggle to match that word count, as there isn’t much to say.
Policy makers stated explicitly that they await the March 22 federal budget. They will then add Finance Minister Bill Morneau’s spending intentions to a new economic outlook set for release in April. However, it’s unlikely that Governor Stephen Poloz is oblivious to what Morneau has in mind. They speak regularly and Poloz has said the central bank and Finance are working together on getting their models calibrated correctly. If Poloz had reason to worry that the fiscal authority was getting cold feet about doing something positive for economic growth, he would have cut borrowing costs in January. He balked, and the case for cutting the benchmark rate only has weakened since.
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