Eyes on the Economy A Hitchhiker’s Guide to the Bank of Canada
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Nov 20, 2024 In this insightful discussion, Ali Jaffery, a Senior Economist at CIBC, shares his expertise on the Bank of Canada's monetary policy. He explains how to interpret the current easing cycle and what it means for interest rates. Jaffery dives into the Bank's inflation risks, highlighting the need for rate relief in an economy grappling with excess supply. He also provides an economic outlook for Canada and the U.S., emphasizing the importance of accurate data for forecasting. Tune in for a deep dive into Canada’s economic future!
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BoC vs. Fed
- The Bank of Canada (BoC) relies on data for near-term moves, unlike the Fed's forward guidance approach.
- This is due to Canada's volatile data, reliance on global factors, and the Fed's larger market impact.
Shock Minus Control
- The BoC emphasizes "shock minus control," comparing actual data against expectations.
- This helps them understand the surprises and adjust policy accordingly.
Inflation Surprises
- The BoC has consistently underestimated inflation, prompting quicker rate relief.
- This repeated error signals the urgency for a more neutral policy stance.