The Financial Post reports in its Wednesday, April 24, edition that the Bank of Canada's current estimate of neutral is somewhere between 2.5 per cent and 3.5 per cent, a wide band that reflects the difficulty of pinpointing the perfect interest rate.
The Post's Kevin Carmichael writes that Governor Stephen Poloz says, "If you drove your car with the same degree of precision that we are able to do monetary policy, you'd be in trouble all the time, driving on the two sides of the road and stuff, because it's a very imprecise business." Speaking to reporters from the sidelines of the International Monetary Fund meetings this month, Mr. Poloz said: "When you try to impose precision on (the neutral rate), it's just going to be frustrating, because it doesn't have the degree of meaning that you'd like to attach to it. We don't know enough about it to be worried about whether it's .25 (percentage point) higher or lower than the central tendency."
The Post says keep all of that in mind this week assessing the latest from the BOC. On Wednesday, it will update its policy stance and release a new quarterly report on the economy. The Post says no one expects the BOC will raise interest rates this week.
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