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In the face of a burgeoning international trade crisis and rising global recession fears, the Bank of Canada had a golden opportunity to signal that it is preparing to jump onto the rate-cutting bandwagon that most of the world’s major central banks have already boarded over the summer.

It chose not to.

Instead, the Bank of Canada looks prepared to wait for more evidence of global threats before taking action. The same central bank that not so long ago embraced “insurance” rate cuts is willing to take its chances this time – and to stand apart from its global peers in the process.

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In its interest rate announcement Wednesday, the Bank of Canada not only held its key rate steady at 1.75 per cent, but it played its cards remarkably close to its vest regarding what it is likely to do next. It could easily have dropped in a phrase to start preparing financial markets for a likely rate cut, perhaps as soon as its next rate decision at the end of October, and almost certainly before the end of the year – which is what the markets widely expect. Instead, it kept its conclusions decidedly neutral. You’d have to be extremely creative to interpret anything in this statement as a preamble to a rate cut.

To be fair, no one could honestly say they had a good idea what the Bank of Canada would signal with this rate announcement, even if the majority had concluded that it wouldn’t unveil an immediate rate cut. Due to the bank’s usual summer quiet period (yes, even central bankers get summer R&R), we haven’t heard a peep from the bank since mid-July – no rate decisions, no speeches, no surveys, nothing that could shed any light on the current thinking at Bank of Canada HQ.

This period of radio silence proved problematic in 2017, when the bank surprised and angered many observers with a September rate hike. The economic data over that summer did, indeed, point to higher rates, but the markets had assumed the bank wouldn’t raise rates without signalling its intentions first.

Perhaps wary of repeating that unpopular episode, the central bank opted to swing its communications pendulum the other way. It not only skirted the rate-cut elephant in the room, but it doled out only a few crumbs to a market starving for central bank information.

Fortunately, traders and other central bank watchers won’t have long to wait for another serving. Bank of Canada deputy governor Lawrence Schembri will deliver a speech Thursday updating the bank’s economic outlook – a speech designed to give the bank a platform to explain its rate decision and its current views in more detail. (Such speeches are common practice following Bank of Canada rate announcements.)

That had better be one hell of a speech. The bank has a lot of questions to answer, and only seven weeks before it goes into its communications blackout period ahead of the Oct. 30 rate decision. And the bank has no public speeches scheduled in that time beyond Mr. Schembri’s address; the central bank traditionally keeps quiet during federal election campaigns, and it looks like it will stick to that tradition again as the Oct. 21 vote approaches. (It will release some critical data on Oct. 22 – its quarterly Business Outlook Survey, which sheds critical light on business investment and hiring trends.)

This sets the bank up to go into the October rate decision having spent remarkably little time bringing the public up to speed in more than three months. It’s shockingly little communication at a pivotal time for global monetary policy.

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Its apparent wait-and-see position is also a departure from the last time it cut rates, in 2015. Back then, the bank made its first cut very early in the game, in anticipation of a major impact for the collapse of the oil market, in what it described as an “insurance” rate cut. It has since been generally lauded for its prescient and decisive action, which may have prevented an all-out Canadian recession.

This time, the bank seems to be counting on the economy to buy time for itself. As the bank pointed out, very strong growth in the second quarter has left the economy close to its full capacity. Inflation is already at the Bank of Canada’s 2-per-cent target, and accelerating wage growth implies that further inflationary pressures are in the pipeline. Under different circumstances, these conditions would suggest that rate hikes are warranted, not cuts. That in itself could buy the bank time; the economy can weather some deterioration before it starts to swing into cutting territory.

Still, with circumstances prone to change almost as fast as Donald Trump can tweet and British legislators can vote, this is not the most comfortable time for central bankers to be quietly waiting. The Bank of Canada’s reticence may make the next few weeks pretty nerve-racking.

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