October 10, 2014 / 8:29 PM / 4 years ago

Bank of Canada chief says best to leave market some rate uncertainty

Bank of Canada Governor Stephen Poloz addresses reporters after a meeting of G-20 finance ministers and central bank governors during the IMF-World Bank annual meetings in Washington October 10, 2014. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) - It is usually preferable for the Bank of Canada to leave the market with some uncertainty about interest rates rather than to give forward guidance, in order to reduce volatility, Governor Stephen Poloz told a news conference on Friday.

“The bottom line for me is that it’s better to leave some of that uncertainty on the market’s plate,” he said, noting that forward guidance can lead to one-way bets with stacked positions and subsequent volatility.

Whatever the bank does will depend on the data flow, he told reporters on the sidelines of the International Monetary Fund and World Bank fall meetings in Washington.

Poloz also said the central bank would need to take into account the effect of lower oil prices on Canada, where 6 to 7 percent of annual income has been attributable to higher oil prices. But he said the fact that lower oil prices for consumers meant they had more income was a mitigating factor.

Reporting by Randall Palmer; Editing by Paul Simao

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