On Tuesday, the Bank of Canada held the overnight rate at 1.0% for the 27th consecutive month. This came as no surprise to anybody, but what was a surprise and equally refreshing was Mark Carney’s confirmation that interest rates would remain low well into 2014.
For the past 27 months the Bank of Canada didn’t touch the overnight rate, but kept threatening to raise rates soon. As the Dread Pirate Roberts used to say “I’ll likely kill you in the morning”. After enough mornings the threat becomes empty, especially given the transparency of the BOC’s mandate and the state of both domestic and international economies.
What the threat signified was a plea to borrowers to manage their finances prudently and borrow less money. It appears that Jim Flaherty and the Department of Finance was much more effective with the sledgehammer of tighter mortgage rules than the empty threats of the Bank of Canada.
Now that the real estate market has cooled and the possibility of a bubble has subsided, our government is now comfortable with our economic trajectory. But do they need to be comfortable to be honest with us. Tightening mortgage rules and changing policies is fair game. As is raising or lowering interest rates. Misrepresentation is unethical and uncalled for. Let’s hope that the days of deception are over, but let’s not forget recent tactics.