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Bank of Canada looks at census debate
The heated debate over the long-form census is hardly consensus-building. A diverse array of groups - from businesses to the opposition to the United Church - have slammed Ottawa's plans to change the long-form census survey from a mandatory one to a voluntary one. The main fear is that the collection and reliability of data will suffer, having far-reaching consequences because so many decisions are based on the information. Yesterday, chief statistician Munir Sheikh went so far as to quit.
Bank of Canada Governor Mark Carney said today that the central bank is an "intensive user" of StatsCan data, Globe and Mail Ottawa correspondent Jeremy Torobin reports. Responding to questions from reporters, Mr. Carney said the Bank of Canada doesn't use raw data from the long-form census by they are inputs into what StatsCan reports.
"We don’t use the raw data that comes out of that," he said. "There could be weightings that are used, for example, that feed into the labour force survey or other series that we use. Some of the income data, some of the productivity measures or labour force measures that are therefore influenced, potentially, but these are second-order or derivative impacts from that raw data that are taken from the building block, much of which comes from the long-form survey.’’
He said the central bank will evaluate the impact of the proposed changes, work closely with StatsCan and "continue to search out alternative sources as appropriate.’’
Mark Carney and Ben Bernanke
Bank of Canada v. Fed
The Bank of Canada has a "solid case" for jumping well ahead of the Federal Reserve in raising interest rates, more than many observers expect, Scotia Capital says. "One doesn’t forecast the future path of the two central banks by extrapolating past relationships between their target rates that rarely departed from one another - and when they did, like early last decade, only to see the BoC backpeddle - without considering what may be different about the current and future context," economists Derek Holt and Gorica Djeric said in a research note today.
On Tuesday, the Bank of Canada raised its benchmark overnight rate by one-quarter of a percentage point, to 0.75 per cent, its second hike in a row. The Fed, on the other hand, is expected to hold its key Federal funds rate at its historic low near zero for some time yet.
Mr. Holt and Ms. Djeric cite two reasons for Canada's central bank moving ahead of its U.S. counterpart:
- "As the U.S. deleverages, Canada continues to leverage higher. We are on a fundamentally different debt cycle in this country. As U.S. households pay down debt, Canadian households are racking it up ... Borrowing behaviour in Canada is being distorted by low rates with a pronounced shift toward interest-only revolving debt via secured and unsecured personal lines of credit that have cannibalized fixed and variable rate installment loans. This reflects monetary policy working all too well, and on that, Canada remains far apart from conditions in the U.S."
- "Concerns over global growth fail to consider that Canada has outperformed despite the fact that net trade has been a drag on the economy. It has been for the better part of the past 10 years, and remains as such for each of the past four quarters. Yet Canada chalked up annualized [first-quarter] growth at a pace double that of the U.S. Why? Concerns about risks may be placing too much weight on global downsides, and not enough weight on domestic upsides. Yes housing is flattening out as a driver of GDP growth, but let’s not discount the already evident expansion in business investment that the BoC surprisingly discounted. Further, we think the Canadian consumer can remain on a positive upward trend in making solid contributions to overall GDP growth."
Added economist Diana Petramala of Toronto-Dominion Bank in a separate research note today: "The Bank of Canada has already moved with two interest rate hikes, while we now believe the U.S. Federal Reserve will remain on hold until mid-2011 .. We still believe the Bank of Canada has plenty of room to continue hiking interest rates."
