The Globe and Mail reports in its Friday, Oct. 28, edition that financial markets and the majority of private-sector forecasters were expecting the Bank of Canada to announce another 0.75-percentage-point increase to its benchmark rate, as it did last month.
The Globe's Emma Graney writes that the BOC instead opted for a 0.5-percentage-point hike, leading to a sharp move in bond markets.
Governor Tiff Macklem had been notably hawkish leading up to the rate decision.
He struck a very different tone at a news conference after the rate hike Wednesday. He said higher interest rates are already weighing on the economy and that the bank needed to "balance the risks of under- and over-tightening" monetary policy.
The smaller rate hike was justifiable, several private-sector economists said, given the BOC's downward revision of its 2023 GDP growth forecasts. Mr. Macklem's abrupt shift in tone, however, caused unnecessary market volatility, they said, and opened the bank up to allegations of political interference. In the days leading up to the decision, NDP Leader Jagmeet Singh and former senior Liberal adviser Tyler Meredith made public statements arguing against overly aggressive monetary policy.
© 2023 Canjex Publishing Ltd. All rights reserved.