On Thursday I wrote a column questioning a statement by Bank of Canada Governor Mark Carney that appeared to suggest the central bank was prepared to raise interest rates sooner than expected in order to temper the rise of household debt. My views were shaped by news coverage of the story, some of which you can read here. The Bank reacted quite strongly, saying I was wrong in my interpretation that Mr. Carney was either speaking cavalierly or signally an abrupt change in course.
I have reviewed the transcript a number of times since then, and, in light of the bank's strong reaction, have two thoughts to offer. One, the Bank is indeed not signalling a change of course, and Mr. Carney is not deviating from the bank's previous statement on interest rates the day before, which you can read here. The Bank has made that abundantly clear, which should come as great relief to our readers. Second, the language used by Mr. Carney on this subject Thursday was confusing and could have left open to fair interpretation that the bank could indeed raise rates sooner than expected. The Bank of Canada has since clarified the governor's intended meaning and I accept its view.