Analysis: Bank of Canada loosens grip on what its deputies can say

Mon Oct 7, 2013 4:26pm EDT
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By Louise Egan

OTTAWA (Reuters) - A candid and forward-looking speech from the No. 2 at Canada's central bank could signal a period of greater transparency under new Governor Stephen Poloz, and a move away from a tightly scripted communications policy that contrasted with that of the U.S. Federal Reserve.

The Bank of Canada has traditionally insisted that all members of its governing council deliver the same message to avoid wrong-footing financial markets, while Fed officials have often issued conflicting views on monetary policy, confusing markets in the process.

But Tuesday's speech by Bank of Canada Senior Deputy Governor Tiff Macklem broke with the Canadian practice of leaving it to the governor to break news.

Macklem provided updated forecasts for Canadian economic growth and the composition of that growth, in a first, especially for a deputy, outside the bank's designated policy announcement dates.

In another first, some economists saw him as slightly less bullish than Poloz, who gave a surprisingly upbeat speech last month on how the economy was at a "tipping point" between improving confidence and expanding capacity.

Thirdly, the central bank gave greater weight to Macklem's views by conducting a media lockup before his speech, giving financial reporters a 90-minute headstart to digest the comments and prepare their reports. Until now, lockups have been reserved for the governor's speeches.

"I do indeed believe that it highlights an important shift in the bank's communications strategy," said Doug Porter, chief economist at Bank of Montreal.

Nobody sees the changes as the first step toward a Fed-like communications model, but it will force markets to take the bank's deputies more seriously.   Continued...

Bank of Canada Governor Stephen Poloz takes part in a news conference upon the release of the Monetary Policy Report in Ottawa July 17, 2013. REUTERS/Chris Wattie