It’s been a rough decade for economic forecasters. Few saw the financial crisis coming and fewer still predicted it would take forever to recover from it. Expert opinion has suffered as a result. But the Bank of Canada seems to be getting a handle on things, at least over the past year or so.
Governor Stephen Poloz scored a rare win over the cynics in 2015, as his shock interest-rate cut a little over a year ago proved to be entirely appropriate. He would approve another quarter-point reduction midyear; again, difficult to say he made a mistake considering what followed. There still is some debate over what to call the affliction that Canada suffered last year. (Mild recession? Stagnation?) But there is little denying that the Bank of Canada was ahead of the curve. Poloz lauded the work of his forecasting department on numerous occasions, suggesting he is pleased with the way they tweaked their models to reflect contemporary economic conditions. That’s significant, considering he spent the early part of his mandate telling the public that economists’ preferred methods for telling the future no longer worked.
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