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Mark Carney's honeymoon at the helm of the Bank of Canada is over.

Less than five months after stepping into his seven-year tenure, the 43-year-old former investment banker has confused the public and perplexed Bay Street at a time when the Canadian economy is listing badly.

The central bank decided last week to hold interest rates steady instead of cutting them by a quarter of a percentage point as economists following Canadian monetary policy had expected.

A quarter of a percentage point this way or that doesn't matter very much in the long run. But the bank's decision to hold after signalling it would cut has puzzled even the people who make a living interpreting central-bank speak, some of whom criticize the bank and Mr. Carney for failing to communicate clearly.

“How do we now understand this new bank Governor?” said Dale Orr, chief economist of forecasting firm Global Insight Canada. “That's the issue.”

The decision to hold rates steady also suggests that the central bank's view of oil and gas, and of Canada's place in the world economy, may have changed, says Patricia Croft, chief economist at Phillips Hager & North.

When the new Governor made his first two rate decisions this spring and cut aggressively by half a percentage point each time, he surprised markets by his decisive action to spur on growth.

But the focus “has swung on a dime,” Ms. Croft said. “Now it's all about inflation. … Mr. Carney has entirely changed his tune.”

Mr. Carney is expected to explain how the bank's views are so much in flux at a late-evening speech in Calgary on Thursday at a conference about oil, the economy and money.

He will likely delve into how the central bank thinks rising commodity prices are affecting the Canadian economy. Mr. Carney has so far avoided the debate, instead projecting that commodity prices will fall as the global economy softens.

But most commodity prices have done anything but fall, and the global economy is not softening as much as expected, in spite of North America's recessionary conditions.

In making a sudden shift to focus on inflation, Canada's central bank is far from alone. The European Central Bank has signalled that rate hikes are in store. And the U.S. Federal Reserve's language about inflation has been stepped up recently too.

But in Europe and the United States, inflation and growth are both stronger than in Canada. Here, economic output has stagnated, and inflationary pressure has been benign. So many economists are doing mental gymnastics to reconcile the central bank's decisions with their own view of how the Canadian economy is dealing with the simultaneous U.S. slowdown and rising energy prices.

“Our view is that core inflation is a dead issue in Canada and will remain that way for a long time yet,” said Derek Holt, vice-president of economics at Scotia Capital.

That's because he thinks higher commodity prices will force consumers and businesses to cut back on spending and production in order to cover their energy bills. The central bank doesn't necessarily disagree with this assessment. In its statement announcing it has put rates on hold last week, the bank said economic growth had slowed in Canada, slack was building up, and core inflation – which excludes the most volatile prices such as energy, some food and shelter – would remain well under control.

Clearly, the central bank is concerned mainly that total inflation will pop up above its target band of 1 to 3 per cent a year, said Ted Carmichael, chief economist at J.P. Morgan Canada.

The central bank sees its sole mandate as controlling inflation, not growth, he said. And when forced to choose between the two, it will always choose to keep total inflation (not core) within its target band.

Even economists who think the central bank is right to stop cutting rates because of rising inflationary pressure are grasping to understand the Bank of Canada's motives.

“Why did they have such a change of heart over a seven-week period?” said Douglas Porter, deputy chief economist at BMO Nesbitt Burns. “He [Mr. Carney] has got some explaining to do.”