Bank of Canada

[August1991]

Tomorrow, the Bank of Canada will announce any change in the bank rate (discount rate) which is a guide to its intended monetary policy. The market anticipates a 1/4 % increase but the Bank may hold off because of oil prices, gasoline prices, the Canadian dollar and an impending election.

I think inflation is a greater worry and the Bank should hold to its intended increase. If the Bank does not raise the rate tomorrow, then I think we can conclude that it is not independent of this Liberal government.

[Toro]

Interesting dilemna.

The Fed Funds rate is a full point over the Bank of Canada rate, yet the loonie is poised to hit a 13 year high.

However, at 2.5%, real rates are almost zero so they have a long way to go yet.

[Riverwind]

I think inflation is a greater worry and the Bank should hold to its intended increase.  If the Bank does not raise the rate tomorrow, then I think we can conclude that it is not independent of this Liberal government.

Consprirasy theories are wonderful: with a little imagination and no proof you can create anything.

Do you monitor economic statistics with enough detail to know for sure that inflation is the 'greater worry'? Do you have access to stats which only the BoC has access to and know that those stats confirm that inflation is the 'greater worry'? If not then you have no basis to make the statement the the BoC is not independent of the gov't since the are many valid (and much more logical) montetary reasons for holding off on a rate hike.

i.e. the Canadian dollar is skyrocketing and that itself helps reign in inflation. Furthermore, the price of oil is going through the roof and that will also act as a break on demand even though it adds to inflation.

[Cartman]

The market anticipates a 1/4 % increase but the Bank may hold off because of oil prices, gasoline prices, the Canadian dollar and an impending election.

Living in Alberta, I admit my views are affected by the strong economy here, but I predict a hike.

[August1991]

The market anticipates a 1/4 % increase but the Bank may hold off because of oil prices, gasoline prices, the Canadian dollar and an impending election.

Living in Alberta, I admit my views are affected by the strong economy here, but I predict a hike.

<{POST_SNAPBACK}>

It is in Alberta's interest to have a rate hike. (Regional politics is another aspect in this decision.)

Consprirasy theories are wonderful: with a little imagination and no proof you can create anything.

I'm sure the advice is to raise the rate. If Dodge doesn't, we can draw conclusions. I personally think the rate will rise for that reason alone. Dodge is a bureaucrat, thrust into the market.

This one will be for show. I wager less on future interest rate rises.

Let's wait and see.

[Guest eureka]

Interesting that you call Dodge a "bureaucrat," August. A couple of weeks ago, I was talking with an old man I bump into now and again who was my wife's history teacher but taught in another city for some time.

There, he taught the former Deputy Governor of the BOC and still keeps contact with him - Norton.

Norton was to have become Governor, but on the end of the incumbent's tenure, he was passed over for Dodge. The reasoning was that Norton was a bureaucrat and Dodge was a businessman.

Norton is now Governor of the Bank of International Settlements in Geneva.

[Cartman]

If the Bank does not raise the rate tomorrow, then I think we can conclude that it is not independent of this Liberal government.

As they have raised the rate, would you be willing to now regard it as independent?

[August1991]

If the Bank does not raise the rate tomorrow, then I think we can conclude that it is not independent of this Liberal government.

As they have raised the rate, would you be willing to now regard it as independent?

<{POST_SNAPBACK}>

Well, the converse is not always true! A father must be a man but a man is not always a father.

But good for Dodge. I suspect the Bank's staff are relieved about this decision, just as I suspect that staffers at the PMO are not happy.

I'm sure Dodge and Martin have chats on the phone. It would be interesting to hear what they say to one another. I would like to believe that Martin tells Dodge to "do what you think is right". (Greenspan probably just nods his head and ignores what Bush Jnr says.)

Norton was to have become Governor, but on the end of the incumbent's tenure, he was passed over for Dodge. The reasoning was that Norton was a bureaucrat and Dodge was a businessman.

After being deputy minister in finance, I believe Dodge worked in investment banking for a year. I would think he would be more successful as a bureaucrat than a business-type.

Here's a very favourable profile, which, as Argus would say, confirms the truth that smart bureaucrats make their bosses look good.

Also, I thought McCallum was considered a potential governor instead of Dodge.

[Riverwind]

Here's a very favourable profile, which, as Argus would say, confirms the truth that smart bureaucrats make their bosses look good.

Here is a very ironic quote from that article:

The currency hit a record low of 61.75 cents (U.S.) a year ago. It has stabilized since then, but remains vulnerable. Should Canadians switch en masse to the U.S. dollar for all their business dealings, or Ottawa finally throw in the towel and adopt the greenback, Dodge will find himself out of a job. It would be an inglorious legacy.

[Toro]

I've always viewed the Bank of Canada to be pretty much but not completely independent.