Last January, Bank of Canada governor Stephen Poloz implemented cuts on interest rates, shocking the public who considered the move irrational.
Later events would bear out the validity of the decision: Poloz, it turned out, proposed the cuts because the Bank of Canada’s in-house models predicted the grim effects of dramatic oil price crashes.
“[Poloz] took a little bit of heat for cutting rates, and it turned out he saw something troublesome in the numbers. He made the right call,” Bank of Nova Scotia
chief executive Brian Porter told Canadian Business
The developments and accurate predictions reveal just how much the Bank keeps from the public. Experts noted that the institution makes available no official records of its debates prior to an interest-rate decision.
“The deputies on the Governing Council speak on the record a couple of times a year, and when they do, they rarely deviate from the script,” Canadian Business
analyst Kevin Carmichael said in his column. “The governor sets the tone. He alone has the statutory authority to set interest rates.”
Carmichael pointed out that although the Bank of Canada has started opening up a bit over the past year by issuing detailed statements on its January 2015 decision, much remains to be done to safeguard the general populace from the possible detrimental effects of the institution’s insular culture.
“The idea is to ensure the public follows along. The Bank of Canada got a controversial decision right last January, but it could miss in the future.” Carmichael said.
“Minutes are tricky because the Governing Council decides by consensus, not votes. But he could loosen the leash on his deputies and encourage them to speak more often and more freely. He could also hold a press conference after each rate decision instead of only half of them,” Carmichael added.
Amid the backdrop of a struggling economy, shrinking commodity wealth, and reduced business investment in the first half of 2015, industry observers have called on the Bank of Canada to end its apparent ‘policy’ of secrecy.