The Mark Carney Fib

VRM Outlook April 2012

Mark Carney and the Bank of Canada released their monetary policy report Wednesday along with an opening statement.  Perhaps we are supposed to take comments to the press with a grain of salt or understand that the government is operating on their agenda, but it’s wrong for a person is a position of authority and trust to the Canadian people to mislead us – even if it’s for our own good.

The opening statement consisted of 15 bullet point items.  The first 14 were consistently negative in their outlook citing European contraction, Chinese deceleration, lower commodity prices, slower domestic housing activity, limited government spending and the list goes on.  Nothing we haven’t already seen in the financial pages, blogs or news stories, but rather just summarized and acknowledged by the Bank of Canada.  All of these factors are a downgrade to our economic outlook and would typically be a call to action to the Bank.  After all, part of the Bank’s mandate is to use monetary policy and interest rate manipulation to smooth out the peaks and valleys of our growth cycle.

What comes across as a glaring standout is Mark Carney’s 15th bullet point.  In it he states, “some modest withdrawal of the present considerable monetary policy stimulus may become appropriate”, which can be translated to “we may need to raise interest rates.”  Pardon me?  A more realistic comment would be that the “current monetary policy stimulus is much needed” or “if conditions persist it may be necessary to increase the monetary stimulus”.

The reason for the misstatement is clear.  Neither the Bank of Canada nor the Federal government wants you borrowing more money.  To suggest that low interest rates are here for a long time or that they may even go lower would add fuel to the debt load fire.  The obvious problem with their behavior is that it’s an untruth propagated to manipulate consumer behavior.  With Jim Flaherty changing the lending rules and Mark Carney spinning the truth they’re leaving no stone unturned in the war on debt.

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