Bank of Canada provides first policy meeting minutes


For the first time in its history, the Bank of Canada will release the minutes of its policy-setting meeting this week, a move that some analysts say will help restore credibility lost last year in the region. context of rising inflation and encouraging out-of-the-box thinking.

Annual inflation hit 8.1% in June, a 39-year high and four times the Bank of Canada’s 2% target. In December, inflation fell to 6.3%.

The BoC started raising rates in March when its benchmark rate was at 0.25%, and most analysts expect the quarter rate to rise to 4.5% when the board of governors consists of six members meet on Wednesdays.

The so-called “summary discussion” from the meeting will be published on 8 February. Following the recommendation of the International Monetary Fund, the BoC in September said it would publish the minutes to improve transparency. ,

Other central banks including the US Federal Reserve, the Bank of England and the European Central Bank have provided some form of records of their meetings.

“Anytime inflation is high – and when it hasn’t been high for a better period of 30 to 40 years – the credibility of the institution is high,” said Jeremy Kronick, director of monetary and financial services research at CD. position will be affected”. Howe Institute, a pro-business consulting organization.

One of the criticisms of central banks over the past year is that “there’s been a lot of group thinking going on,” Kronick said, so giving a look at the policy meeting “could allow people to found that there were debates and deliberations.”

Group thinking is where individuals ignore potential problems or new ideas in pursuit of consensus. Last year, central banks around the globe initially thought that inflation would be “temporary” or pass quickly.

Instead, supply chain difficulties persisted, economies recovered quickly after restrictions were eased, and the outbreak of war in Ukraine caused energy costs to soar that most – including the US Federal Reserve – must rush to raise interest rates and curb inflation.

“The big enemy for policymakers and investors is group thinking,” said Marc Chandler, director of market strategy at Bannockburn Global Forex LLC.

BoC Governor Tiff Macklem last year acknowledged mistakes and promised more transparency. The glimpse of policy meetings comes at a delicate time, as the bank tries to steer the economy towards a “soft landing” rather than a deep recession.


Other market watchers say the minutes release is more of a public relations exercise than an attempt to increase transparency.

“It’s mostly optical,” said Derek Holt, vice president of capital markets economics at Scotiabank, adding that the minutes would be “a rather slow step” towards more transparency.

David Rosenberg, president and founder of Rosenberg Research, said the BoC doesn’t need to rebuild its credibility because “the inflation we’ve seen over the last 18 months is global.”

Instead, Rosenberg said: “It’s a PR business, with the bank saying: ‘Look at us, we’re becoming more transparent.”

Conservative leader Pierre Poilievre, during his election campaign last year, blamed Macklem for letting inflation get out of control and said he should be fired.

One potential pitfall is that the number of minutes can create uncertainty over the overall BoC message.

Now, everyone on the board is “singing the same hymn,” said Kristina Hooper, global chief market strategist at Invesco, an American asset management firm. may show that they are not.

“One of the complaints that is sometimes made about the Fed is that there are different voices saying different things… and that can create confusion.”

Because policy decisions are made by consensus rather than vote, “the summary will not provide individual attribution information,” said Paul Badertscher, the bank’s director of media relations. board members, as well as not recording votes because there are no votes in our system.” .

In October, Macklem said the minutes would reveal the key points of the discussion, the options and risks considered, and ultimately, how consensus was reached and why.

(Reporting by Steve Scherer, additional reporting by Fergal Smith, editing by Deepa Babington)


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