Bank of Canada Governor Stephen Poloz has, for some time, encouraged disagreement in financial markets over the path for interest rates. It hasn’t been easy, as the closest observers of the Bank are prone to groupthink. But on the eve of 2018, Poloz has finally achieved what he wants: an honest debate about monetary policy.
In one corner, a group of analysts expect three increases next year; in the other, a pack of analysts predict only one increase. The discrepancy in forecasts suggests that Poloz’s refusal to guide investors is creating some healthy confusion; there will be griping and volatility, but the uncertainty should encourage more hedging and less thoughtless risk-taking reminiscent of the pre-crisis years.
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