Thursday 25 October 2012

Mark Carney to give ample notice of any interest rate hikes

The Bank of Canada decided once again to hold the benchmark rate at 1%, a decision that didn't come as a surprise to Canadians. The most significant change in this announcement was that the bank's governor, Mark Carney, omitted his usual statement about the necessity to raise rates in the future. Previous to the bank's announcement, Carney gave a speech in Nanaimo, B.C., and pledged to Canadians that going forward,  he will be transparent regarding the central bank's decisions - thus limiting the uncertainty many are feeling.

This piece from CBC news cites the example Carney gave in his speech; that if the decision to raise rates was made, he would make it clear how long the measure would take to work. He added that raising rates remains a "hypothetical question" at this point, yet the bank is not ruling it out. It is the Bank of Canada's intent to supply Canadians with a sense of security when it comes to planning their finances. The hope is that this transparency will give Canadians this confidence. The bank's main concern has been household debt, however recently introduced mortgage regulations have proved to have their desired effect, thus eliminating the immediate need to raise the benchmark 1% rate.

Carney also spoke about the resiliency of the Canadian economy, pointing out that in the wake of the global financial crisis, it has strengthened. "As Canadians, we need to focus on what we can control," stated Carney. "We can improve Canada's low productivity growth and sharpen our focus on emerging markets. And we can continue to invest in our greatest resource - our people."

Click here to read the full article from CBC News.

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