The Bank of Canada (BoC) is trying to open up. But unlike your typical therapy session, it’s the Canadian public with the trust issues.
What happened: In two firsts, the BoC published a Market Participants Survey and will release a Summary of Deliberations from its latest meeting today. After unexpected interest rate hikes hit its credibility, it’s trying to be more transparent about its inner workings.
- The survey shows economists and investment strategists (and other key financial players) mostly disagree with the bank’s economic growth prediction for 2023 but do agree with its prediction that inflation will fall below 3% by year’s end.
Catch-up: After promising to maintain super-low interest rates in 2020, the BoC announced a series of rate hikes to respond to inflation in 2022. It was a bad look: the reversal took markets by surprise, and burned borrowers (especially homeowners) who believed rates would stay low.
- The International Monetary Fund has urged the BoC to increase transparency by releasing something along the lines of memos put out by the US Federal Reserve and the Bank of England.
- The BoC is doing that in the form of its Summary of Deliberations and adding a poll of “market participants” to its regular surveys of businesses and consumers to get a better sense of Bay Street’s expectations.
Why it matters: After interest rate flip-flops, both Bay Street and consumers don’t want any more surprises coming out of the central bank. Being more open about the thinking behind its decisions–and the information driving it–is a step in that direction.