What if, instead of calling it a recession, we call it a cracked tree that might someday maybe fall on your neighbour’s house?
This past Wednesday, Bank of Canada Governor Stephen Poloz, as was widely expected, announced that the Bank would be lowering its overnight interest rate by 0.25%, down to a mere half-percent, which by historical standards is extremely low. The move comes amidst increasing signs of a slowdown in the Canadian economy, with bank analysts from TD and Bank of America, among others, projecting that Canada entered a recession in the first half of 2015.
While we won’t have the final statistics until September (just in time for the federal election campaign!), the emerging consensus is that growth in Canada has been at best stagnant so far this year. So market analysts were keen to hear what Poloz had to say when he announced the new rate.
Poloz has been extremely careful with his language as of late, ever since he found himself in hot water for (accurately) describing the outlook for the Canadian economy as “atrocious” this past March in an interview with the Financial Times. Though the first-quarter numbers turned out to be worse than even the pessimistic Poloz projected, the backlash against his comments was so strong that he’s been striving to strike a tone of cautious optimism ever since.
So perhaps it was no surprise that he went WAY out of his way to avoid actually uttering the word “recession” this week.
But the disingenuousness – and sheer politicality – of his cautious language deserves calling out.