OTTAWA (Reuters) - The Bank of Canada is looking for ways to give markets and the general public more insight into how it decides interest rates, starting with the publication of new bits of data in two of its regular reports this month.
Deputy Governor Sheryl Kennedy said on Tuesday the central bank will study whether to make public more details of the analysis it undertakes when making quarterly projections and setting rates.
The fast-changing economic scenario since the U.S. subprime mortgage meltdown hit world financial markets has made second-guessing the Bank of Canada's next move more difficult than usual. Many economists were taken by surprise by the bank's December 4 interest rate cut, for example.
In a speech in Montreal, Kennedy said the bank aims to continue improving transparency to help financial markets better understand the uncertainties surrounding its outlook.
In the meantime, it will make two small but concrete changes immediately.
On January 14, for the first time, the public will be able to see what Canadian companies said about credit conditions as part of the Bank of Canada's quarterly survey of businesses. The bank will also publish their answers on past sales, which were previously confidential.
On January 24 in its Monetary Policy Report Update, the bank will add a table with projections for global economic growth. It normally only publishes that table -- which contains specific projections for the United States, Europe, Japan, China and newly industrialized nations of Asia -- in the full report and not the update.
"We have provided more detail about how we see the economy unfolding, what forces might affect inflation, and what assumptions we have had to make about more volatile or uncertain variables," Kennedy said in a speech in Montreal.
"This, in turn, helps to explain the reasons behind our most recent decisions and provides some insight into possible future actions."
But she warned against analysts putting too much weight solely on Bank of Canada statements, urging them to do their own "analytical heavy lifting."
"If you are considering placing a bet between what you think we said we were going to do and what you think we ought to do, I'd go with the latter."
Reporting by Louise Egan; Editing by Rob Wilson