MNI BRIEF: Rate Mismatches About Economy Or Mistrust, BOC Says

Mismatches between investors and central banks about the path of interest rates can reflect useful information about economic risks or a lack of confidence in monetary policy, BOC Governor Tiff Macklem said Thursday, as markets bet he and Fed Chair Jerome Powell will switch to rate cuts later this year.

“If it’s the case that there’s a different view about the economy, I mean that’s information for us,” Macklem said at an IMF panel in Washington. “One of us is going to be right, one of us is going to be wrong, there’s going to be some convergence. And so understanding how the market sees the data I think is helpful information for the central bank.”

“When it’s a concern though is if you think markets don’t understand our perspective or even perhaps worse, they don’t believe us, there’s a credibility problem,” he said. The BOC on Wednesday held a 4.5% rate for a second meeting and said it could hike again after eight prior increases. (MNI INTERVIEW: BOC Seen Cutting Rate Around Yr-End: Ex Adviser)