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HIGHLIGHTS-Bank of Canada's Poloz news conference
November 7, 2017 / 7:43 PM / a month ago

HIGHLIGHTS-Bank of Canada's Poloz news conference

TORONTO, Nov 7 (Reuters) - Below are some key quotes from a news conference by Bank of Canada Governor Stephen Poloz following his speech on the central banks’ ability to understand inflation. Poloz last spoke in testimony to House of Commons and Senate committees in the days following the bank’s Monetary Policy Report and policy meeting on Oct. 25, when the bank held interest rates steady.

POLOZ ON INFLATION TARGET

“Our intention is always to aim for 2 percent. And as I said, in doing that right now our forecast is that around a year from now we’d be at about 2 percent. But we actually are forecasting inflation for the following year. And we want to make sure the fundamentals are lined up to be consistent with an inflation rate of 2 percent then.”

“But what happens between now and then is something happens and it goes one way or the other, we’re totally symmetric about it and I think that’s an important thing and that’s why we have a band, because things can happen in either direction between now and then.”

“Even though we’d still be aiming for 2 (percent), it would have to be the actual trend in inflation would have to be heading above 2 by our forecasts for that to be an issue for policy.”

“Our intention is always to aim for 2 percent, because that is our target. And the credibility that we’ve build up over the years hinges on that, and being able to explain, if we miss it, why we missed it.”

“It wouldn’t be a very good explanation to say ‘well, we missed it on purpose’, I don’t think it would be a very valid explanation.”

POLOZ ON DE-ANCHORING:

“The longer the inflation spends time below your target or above for that matter ... the greater the risk that expectations will gravitate towards the actual experience instead of the target itself. So we call that de-anchoring. We have no evidence at this time of any of that. All of our survey suggests a very strong anchoring on 2 percent. And I think it probably has to do with how careful we’ve been to explain to people why a reading of inflation has been distorted one way or another.”

POLOZ ON “GOOD DISINFLATION”:

“If inflation is below target because of what we consider to be ”good disinflation“ - so certain things in your consumer basket just costs less to buy ... because of new efficiencies in the economy or just more competition, for example the food story is less expensive because of increased competition. Well, it would be curious indeed for the central bank to pump up inflation in other parts of the economy to somehow offset ”good disinflation“ in other parts.” (Reporting by Solarina Ho and Alastair Sharp)

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