{"id":33648,"date":"2018-04-23T06:42:33","date_gmt":"2018-04-23T11:42:33","guid":{"rendered":"http:\/\/olduvai.ca\/?p=33648"},"modified":"2018-04-23T06:42:33","modified_gmt":"2018-04-23T11:42:33","slug":"lesson-from-canada-there-really-are-no-rate-hike-targets","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=33648","title":{"rendered":"Lesson From Canada: There Really Are No Rate Hike Targets"},"content":{"rendered":"
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Lesson From Canada: There Really Are No Rate Hike Targets<\/a><\/h3>\n<\/div>\n
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Despite an inflation spike in Canada, Bank of Canada Governor Stephen Poloz says “Rate hikes Aren’t Mechanical.”<\/p>\n<\/section>\n<\/div>\n<\/header>\n
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Bloomberg reports Poloz Says Canadian Inflation Spike Doesn’t Violate 2% Target<\/a>.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Bank of Canada Governor Stephen Poloz said he\u2019s not worried about inflation temporarily rising above the 2 percent target this year, and the acceleration by itself isn\u2019t sufficient to warrant an interest rate increase.<\/p>\n

Speaking Saturday to reporters in Washington, Poloz said a tolerance for temporary movements is exactly why the central bank uses a 1 percent to 3 percent range for inflation and doesn\u2019t mechanically raise interest rates when price growth surpasses the 2 percent point.<\/p>\n

\u201cWhat I don\u2019t want is for people to be spending this entire year asking me what I\u2019m up to because inflation is above target,\u201d Poloz said. \u201cYou need once in a while to remind people that there\u2019s a range and that\u2019s okay, the policy allows for this. We\u2019re not violating our target in some way.\u201d<\/p>\n

Poloz said he even sees some incidental benefits from the brief acceleration. Since inflation has under-performed in recent years, a period above target could actually help reinforce expectations for inflation at 2 percent, he said.<\/p>\n

\u201cIn that abstract way, it\u2019s actually a positive thing because we\u2019ve had an extensive period where it\u2019s been below, so that period of slightly above is going to help reinforce that 2 percent average which we haven\u2019t quite made in the last few years,\u201d Poloz said. \u201cThere is no intention there. I\u2019m just saying that\u2019s a positive byproduct of that modest overshoot that\u2019s happening.\u201d<\/p><\/blockquote>\n<\/div>\n<\/div>\n<\/div>\n

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Lesson of the Day<\/strong><\/div>\n<\/div>\n
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If central banks in Canada, the US, Europe, anywhere really, want to hike, they will. If they don’t, they will find an excuse not to.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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In the case of Canada, Poloz claims there is a benefit to higher inflation because it was too low, too long.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n","protected":false},"excerpt":{"rendered":"

Lesson From Canada: There Really Are No Rate Hike Targets Despite an inflation spike in Canada, Bank of Canada Governor Stephen Poloz says “Rate hikes Aren’t Mechanical.” Bloomberg reports Poloz Says Canadian Inflation Spike Doesn’t Violate 2% Target. Bank of Canada Governor Stephen Poloz said he\u2019s not worried about inflation temporarily rising above the 2 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[942,103,122,426,2468,431,14648,13390,534],"class_list":["post-33648","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-canada","tag-canada","tag-central-bank","tag-inflation","tag-interest-rate-hike","tag-interest-rates","tag-michael-shedlock","tag-mishtalk","tag-monetary-policy"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33648","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=33648"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33648\/revisions"}],"predecessor-version":[{"id":33649,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33648\/revisions\/33649"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=33648"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=33648"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=33648"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}