A former Bank of Canada governor says analysts shouldn’t expect the central bank to spoon-feed them information when it comes to upcoming interest rate decisions.
“Central banks also want to try to learn from markets,” David Dodge, who is now a senior advisor at Bennett Jones, told BNN in an interview Wednesday. “Markets are providing information. And for the analysts that are at our commercial banks to come along and say, ‘well the central bank hasn’t spoon fed us enough information’ is just incorrect.”
“Those are the very people that should be setting out their analysis and providing advice to their investors and their clients on how they see the economy moving, rather than, in a sense, applying some sort of Kremlinology to read the tone of spokesmen from the central bank ,” he added.
The Bank of Canada has recently come under scrutiny for lack of communication over upcoming interest rate decisions.
“Given today’s abrupt hike, with no prior communication since the previous meeting, and the bank’s seeming care-free stance on the soaring Canadian dollar, we can’t rule out anything in coming meetings,” BMO Capital Markets Chief Economist Doug Porter wrote in a note to clients when the central bank unexpectedly raised rates in September.
Bank of Canada Senior Deputy Governor Carolyn Wilkins responded to the criticism last week by saying the Bank wants to improve communication over future rate decisions.
"My hope is there is some way to interact that makes it easier for people to understand how we think about the economy, what information is important to us and how that might be evolving," Wilkins told reporters.
Many analysts weren’t expecting a rate increase until October, and were taken by surprise when the Bank of Canada raised rates 25 basis points in September.
The central bank hiked rates for the first time in seven years this past July.