October 29, 2014 / 8:34 PM / in 4 years

Bank of Canada head: forward guidance reserved for times of stress

OTTAWA, Oct 29 (Reuters) - The Bank of Canada will only use forward guidance during periods of stress and when traditional monetary policy tools are constrained, Governor Stephen Poloz said on Wednesday.

“Otherwise, we will let markets do their job, which is to deal with the daily flow of new information and grind out new pricing, without specific interest rate guidance from the bank, but supported by the increased transparency around our outlook for inflation and the risks we are managing,” he said in his opening statement before the Senate Standing Committee on Banking, Trade and Commerce in Ottawa.

He said the risks around achieving the bank’s inflation target over a reasonable time frame are roughly balanced. (Writing by Richard Valdmanis; Editing by Chris Reese)

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