OTTAWA (Reuters) - Canada’s central bank will never shift its focus from inflation to the exchange rate, Bank of Canada Governor Stephen Poloz said in an interview published on Friday, confirming a hands-off approach even if the strong currency were to hurt exporters.
“You can really only control one thing,” Poloz told the Globe and Mail’s Report on Business magazine.
“The thing we care most about is inflation, so we’re not going to ever deviate from that just because something about the dollar is bugging us.”
Poloz replaced Mark Carney at the Bank of Canada in June. His past as head of the country’s export credit agency led to speculation he would be more sympathetic toward exporters’ desire for a weaker Canadian dollar versus the U.S. dollar, which would help the struggling sector get back on its feet.
He has repeatedly denied any such inclination. The Bank of Canada has a policy of not intervening in the exchange rate except in extraordinary circumstances.
Poloz also suggested in the interview a possible shift in the Bank of Canada’s communications style to give a greater role to his deputies and show that policy making is not a one-man show but a team effort.
“My style is not to lead with what I think, but to sit back and let ‘er go,” he said.
One thing Poloz could do is allow his deputies to speak more freely in public than has been the norm. Unlike the U.S. Federal Reserve, the Bank of Canada’s six-member governing council makes decisions by consensus rather than voting and they all stick to the same script when speaking in public.
Communicating policy decisions is largely the job of the governor through speeches and news conferences, while the deputies’ speeches rarely break new ground.
But Poloz made clear any change would be incremental. He said he prefers the Canadian model to the one employed by the U.S. Federal Reserve, which has confused markets with often contradictory policymakers’ views on the best strategy for rolling back from the massive bond-buying program.
“At a minimum, I would say that I wouldn’t want monetary policy to be a source of uncertainty,” he said.
In another sign the bank might be allowing deputies to share more of the limelight, the bank announced on Thursday it will start holding media lockups for deputies’ speeches whereas until now they were reserved only for the governor’s speeches.
Lockups are typically used for market-sensitive information. The system allows reporters to read the text ahead of time on the condition they don’t release any news stories until a designated time.
The first such lockup will take place on a trial basis on October 1 for a speech by Senior Deputy Governor Tiff Macklem.
“Starting in 2014, the Bank of Canada will be in a position to hold lockups for speeches by all deputy governors, as has been requested over the years by reporters covering the Bank,” said Bank of Canada spokeswoman Dale Alexander.
Reporting by Louise Egan; Editing by Kenneth Barry