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Bank of Canada Seen as Behind the Curve After Rate Surprise

  • Macklem opts to merely signal hike despite clear case to move
  • Standing pat risks further fueling inflation and house prices
Pedestrians pass the Bank of Canada building in Ottawa on Jan. 25, 2022.
Pedestrians pass the Bank of Canada building in Ottawa on Jan. 25, 2022.Photographer: David Kawai/Bloomberg
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Governor Tiff Macklem was going to risk losing some credibility at this week’s Bank of Canada decision, whatever he did.

His own analysts presented him with evidence the economy is on the cusp of overheating and made a clear-cut economic case to hike immediately. But Macklem had told Canadians and investors they’d get a heads up before increasing rates. A move Wednesday could have been seen as a betrayal of that promise.