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In other words, the fact Poloz has moved so quickly into what is for him uncharted territory may be a signal he’s determined to move. Talk of higher rates may suggest an underlying change has taken place.

Tightening Bias I

Of course, just because there’s a particular bias, it doesn’t mean rates will move in that direction. A lot depends on what inflation does. Take 2013 as an example.

When he took over at the Bank of Canada in June of that year, Poloz inherited a tightening bias from his predecessor, Mark Carney. But it didn’t last long as inflation continued to remain sluggish.

At his first rate decision six weeks later, Poloz kept the bias but toned it down. In October, amid a deteriorating global growth outlook, Poloz dropped the bias altogether.

That year, quarterly GDP growth was robust, averaging 3.6 per cent, but inflation was hovering around 1 per cent. Inflation concerns won the day. (Not surprising given the Bank of Canada’s mandate.)

Today, it’s a similar story. In the last three quarters, growth has averaged 3.5 per cent, while inflation is running at just 1.5 per cent.

Inflation Matters?

That’s why last week’s changes were such a surprise, given how much inflation does matter. Could the new language mean the central bank’s modeling — at the current pace of growth — is beginning to forecast inflation well beyond the Bank of Canada’s 2 per cent target.

As recently as May, the bank said low inflation was a sign of the economy’s excess slack. In her June 12 speech, Wilkins said it measured the “lagged effects” of excess capacity.

That’s a big change in three weeks, and makes consumer price inflation data due Friday — the last set before the July 12 decision — particularly important.

Bloomberg.com