Welcome to neutral-ish: The Bank of Canada’s almost-end to rate hikes
In central banking parlance, there are, typically, three types of policy stances that a bank can embrace: hawkish , dovish and neutral.
“If we start to see an accumulation of evidence that inflation is not coming down in line with our forecast, we’re prepared to raise interest rates further,” Mr. Macklem told reporters. One interpretation is that the bank is sold on a move to neutral, but wanted to give a mindful nod to the risks to the upside for inflation. With the inflation rate still north of 6 per cent, an upside surprise would be much more problematic for the bank than a forecast miss to the downside.
Regardless, it is a substantial policy shift. As Ms. Rogers explained in the news conference, up until now, the bank’s policy-setting Governing Council has been weighing “an accumulation of data” to tip the scales to justifying putting rate hikes on hold. From here, she said, it will require an accumulation of data “in the other direction” to end the pause and resume rate hikes. They need to be talked out of holding steady now, not talked into it.
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