“Faced with the recent failure of many of its economic models, the Bank of Canada says it is now relying more on anecdotal evidence, including ‘conversations with real Canadians’ and regular meetings with chief executives.
‘We are in uncharted territory,’ Bank of Canada Governor Stephen Poloz acknowledged in a message contained in the central bank’s 2013 annual report, released Friday.” Barrie Mckenna wrote for the Globe and Mail. Mckenna continued, “‘The world has clearly changed since the global financial crisis.’ Mr. Poloz said bank economists have been struggling to adapt to a ‘new reality’ since the crisis, making it much tougher to predict where the economy is headed. He acknowledged that the economy has ‘fallen short of our expectations.’ Mr. Poloz and other top bank officials have acknowledged in recent speeches and statements that the economy has not picked up as rapidly as initially expected, with exports weak and inflation well below its 2-per-cent target. Earlier this month, deputy Governor John Murray admitted that the economy hasn’t been behaving as the bank’s models suggested it should. Inflation is stubbornly low, exports aren’t bouncing back with global demand and businesses have cash, but aren’t investing. Meanwhile, the housing market seems to defy gravity, even as all the usual warnings signs – including record-high debt levels and prices – are flashing red. ‘The macroeconomy has not been unfolding exactly as we had expected,’ Mr. Murray said bluntly.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS
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