Apr 12, 2023
BoC more likely to raise rates instead of lowering them: John Manley
, BNN Bloomberg
BoC isn’t being terribly reassuring and gives no indication of when rates will fall: John Manley
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The Bank of Canada’s rate hold was widely expected by economists, and should the bank need to take action in the coming months, a rate hike would be what to anticipate, former deputy prime minister John Manley said.
The decision to hold rates steady at 4.50 per cent is a reflection of the BoC’s commitment to take inflation down to its two per cent target, a goal the central bank is projecting to reach by the end of 2024, a press release on Wednesday revealed.
“If they’re leaning one way or the other, it’s to raising rates rather than lowering them,” John Manley, the former deputy prime minister and former finance minister, who is now a senior advisor at Bennett Jones, said in an interview on Wednesday.
Manley stressed the point that the central bank is doing what is necessary to tame inflation now instead of having to move drastically in the future to get things under control.
“It’s kind of like moderating the temperature of the shower in a cheap hotel. You turn it one way and you burn yourself, you turn it another way and it’s freezing. It’s really hard to get it just right,” he said.
“I think they’d rather make sure they get inflation down so they don’t have to turn it too far one way or another to get the temperature just right,” he added.
While he noted that the BoC governor likely doesn’t want to bring interest rates astronomically high, as other central bank heads have had to do in the past, he noted that a cut is momentarily out of the question.
“They (the BoC) didn’t give anybody any expectation that there’s a lowering of the rates coming anytime soon,” Manley said.
The possibility of easing monetary policy could come once the labour market shows signs of a cool down, another expert stated.
“The labour market has to, at a minimum, stop adding jobs,” Ed Devlin, the founder of Devlin Capital and former head of Canadian portfolio management at Pacific Investment Management Company, LLC (PIMCO), said in an interview on Wednesday.
While Devlin is also of the view that the BoC could likely raise rates after a prolonged period of pause, he stressed the importance of the labour market's future performance in the bank's decisions.
The question is are rates moving fast enough? Based on unemployment np. (can you check this line)
“They want to see an uptick in unemployment, that’s a good thing at these levels,” he said.
The decision to hold rates steady at 4.50 per cent is a reflection of the BoC’s commitment to take inflation down to its two per cent target, a goal the central bank is projecting to reach by the end of 2024, a press release on Wednesday revealed.
“If they’re leaning one way or the other, it’s to raising rates rather than lowering them,” John Manley, the former deputy prime minister and former finance minister, who is now a senior advisor at Bennett Jones, said in an interview on Wednesday.
Manley stressed the point that the central bank is doing what is necessary to tame inflation now instead of having to move drastically in the future to get things under control.
“It’s kind of like moderating the temperature of the shower in a cheap hotel. You turn it one way and you burn yourself, you turn it another way and it’s freezing. It’s really hard to get it just right,” he said.
“I think they’d rather make sure they get inflation down so they don’t have to turn it too far one way or another to get the temperature just right,” he added.
While he noted that the BoC governor likely doesn’t want to bring interest rates astronomically high, as other central bank heads have had to do in the past, he noted that a cut is momentarily out of the question.
“They (the BoC) didn’t give anybody any expectation that there’s a lowering of the rates coming anytime soon,” Manley said.
The possibility of easing monetary policy could come once the labour market shows signs of a cool down, another expert stated.
“The labour market has to, at a minimum, stop adding jobs,” Ed Devlin, the founder of Devlin Capital and former head of Canadian portfolio management at Pacific Investment Management Company, LLC (PIMCO), said in an interview on Wednesday.
While Devlin is also of the view that the BoC could likely raise rates after a prolonged period of pause, he stressed the importance of the labour market's future performance in the bank's decisions.
The question is are rates moving fast enough? Based on unemployment np. (can you check this line)
“They want to see an uptick in unemployment, that’s a good thing at these levels,” he said.
