Key Bank of Canada inflation gauge 'useless as a policy guide'
“I believe the steep upward revisions to common have rendered it useless as a policy guide,” said Doug Porter, chief economist at BMO Capital Markets. “It missed the inflation boat at the start of the year and sent an entirely misleading signal to policymakers.”Article content
These revisions are happening because the statistical model is picking up more co-movement in price, so the entire series has to be re-calculated each month, said Statistics Canada. Governor Tiff Macklem is due to give a speech on the current economic situation on Thursday, with a news conference to follow.
But it was developed at a time when inflation rarely drifted out of the Bank of Canada’s one per cent to three per cent control range. Inflation has now been above three per cent for 17 months and was at seven per cent in August.
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