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Bank of Canada says it will lie low to avoid impacting federal election campaign

WATCH ABOVE: 5 economic issues to watch for this campaignN – Sep 11, 2019

The economy is a top concern for Canadian voters and the Bank of Canada, an authority on the issue, will be largely silent during the federal election campaign.

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The quiet is deliberate. The central bank says it wants to avoid making any possible impact — or the appearance of an impact — on the political contest.

“As a neutral and politically independent organization, we aim to ensure our messages are not misinterpreted or misused during a period of heightened political sensitivity,” Nicholas Galletti, a spokesman for the Bank of Canada, wrote in an email.

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“For this reason, our long-standing practice has been to refrain from accepting new public events and curtail our media activities during election periods. This isn’t new.”

But it is more pronounced this time, with a gap of almost two months in scheduled news conferences or speeches by the bank’s senior figures.

The election campaign is taking place at a time of increasing political pressure on some central bankers. For instance, U.S. President Donald Trump has repeatedly criticized Federal Reserve chairman Jerome Powell, in public, over his monetary-policy positions. Trump’s called him “clueless,” attacked his “horrendous lack of vision” and said the Federal Reserve is a drag on the U.S. economy. (Powell is a Trump appointee.)

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The Canadian campaign is also unfolding as global trade conflicts, including ones sparked by Trump, weigh on the world. In response, central banks have been signalling or taking policy actions, including cutting interest rates.

Canada’s economy has been resilient so far and the Bank of Canada has held steady on interest rates, but any big global downturn would pose a major risk. Many analysts are predicting the Bank of Canada will cut rates to boost borrowing and spending at its next policy announcement on Oct. 30 — a little over a week after the Oct. 21 vote.

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The Oct. 30 date will also include the release of the bank’s quarterly projections for the economy and a news conference with governor Stephen Poloz and Carolyn Wilkins, the senior deputy governor.

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Their appearance will come nearly eight weeks since the public last heard from one of the bank’s top officials. Deputy governor Lawrence Schembri gave a speech and took questions on Sept. 5, which was a day after the most-recent rate announcement.

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Fellow deputy governor Timothy Lane is scheduled to appear on a panel Oct. 18 at the Institute of International Finance in Washington to discuss the “future of money.” Lane’s remarks will not be published by the bank and it’s unlikely his comments will delve into Canada’s economic outlook or be directed at voters.

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Galletti said the bank’s leadership can end its quiet period at any time to communicate with the public and markets on policy, if they determine conditions call for it.

“The bank’s operational independence for monetary policy means that we will conduct monetary policy appropriate to the economic circumstances at the time, including during election periods,” he said.

“This includes any communication about policy or the outlook that governing council judges necessary.”

So far, the bank’s public calendar is empty until Oct. 22, the day after the election, when it will release its quarterly survey of business executives.

READ MORE: Canadian economy expands 3.7% — strongest quarterly growth stretch since 2017

In the lead-up to the 2015 federal election, on Oct. 19 that year, Poloz delivered three speeches in September and October. Agathe Cote, then deputy governor, gave a speech in late September that year.

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The Bank of Canada says during election campaigns it has followed an approach to proceed with “pre-planned public events,” including rate decisions, the release of bank publications and staff research, and public speeches by governing council members.

Galletti said there’s nothing fundamentally different this time around compared to 2015, except that the bank now reviews its speech plans every six months instead of a full year in advance.

“As such, our plans for the second half of 2019 were solidified with more certainty around the date of the election,” he said.

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(Like this year’s election, the one in 2015 was on a day set in the federal law on fixed election dates.)

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Galletti said another new development that factored into the bank’s 2019 planning was the introduction last year of its “economic progress speeches.” The addresses are given by deputy governors a day after any rate announcements that do not have accompanying news conferences.

Douglas Porter, chief economist for BMO Financial Group, said he always operates under the assumption that the Bank of Canada wants to stay as far away from election campaigns as it can.

“Structurally, they want to be as neutral as possible and so it’s understandable in this situation — and folks like myself are very unlikely to criticize them for wanting to lay low during the election campaign,” Porter said in an interview.

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He did note that there’s little time between the election and the Oct. 30 rate announcement, which leaves the bank a tiny window after the vote to hold a public event to lay public groundwork for an interest-rate change. But Porter added that the Bank of Canada in recent years has shown a tendency to avoid providing too much guidance to the markets ahead of rate decisions.

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The bank, of course, would have to respond to a significant economic event, he said, and has made rate moves even in the middle of election campaigns before.

Porter recalled an extraordinary situation during the 2008 federal campaign when the bank made a co-ordinated rate cut with other central banks during the financial crisis.

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