Quote:
Originally Posted by bizaro86
No, like I said now that we have inflation they need to raise rates. But he never should have told people he wasn't going to for years.
I don't agree it's hindsight bias. He's an economist. He should have known massive increases in money supply via stimulus spending and quantitative easing worldwide had at least a possibility of causing significant inflation. Those policies increase inflation by design, so it shouldn't seem impossible that they worked. Once you know that, then promising to keep rates low is a foolish thing to do, because you're making a promise you may not be able to keep.
Ukraine/supply chain issues are a factor for sure, which wasn't foreseeable. But we had a giant increase in money supply, much of which was done in a way (direct stimulus to consumers) that also gives it a high velocity of money, since consumers are more likely to spend the cash than bondholders who get bought out in QE. I'm not saying he should 100% know the future, because I agree he isn't an oracle. But this was an eminently possible future so he shouldn't have promised he wouldn't take the obviously required action.
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I disagree though, largely because we heard the same arguments after 2008-09. People were predicting $5000/oz gold because of hyper-inflation and there was "no way they could get that money out of the system". Well, it's easy to see now that we weren't dealing with hyper-inflation, they did get the money out and in fact what we saw was issues with deflation.
But more than this, its odd to blame the BoC. In a country where we routinely see that people have terrible financial literacy, the thought is they're actively paying attention to the comments Macklem made and making life decisions based on them? Gimme a break. People *might* look now, based on the newsworthy inflation issue, but even then I think that most Canadians go about their day and pay zero attention to what the Governor of the BoC has to say.