Tiff Macklem’s dashboard: A picture of the economy’s exit from a pandemic puzzle

Governor Tiff Macklem said the path of interest rates will be determined by a set of indicators. We did our best to reverse what the Macklem panel looks like, turning indications into the data the central bank cares about into charts, and then updating them when new numbers arrive.

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Bank of Canada Governor Tiff Macklem has one goal: to manage inflation, which the central bank defines as keeping the Consumer Price Index (CPI) progressing at an annual rate of about two percent.

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The pandemic made it more difficult to achieve that goal than usual. The CPI works well over three percent. In retirement, this implies that Macklem has left interest rates too low for too long.

But context matters. The Bank of Canada bets that the current burst of inflation is exaggerated by an imminent imbalance of supply and demand; once suppliers expand to meet the desire of freed consumers to spend, the wild prices of recent months should calm down. In fact, Macklem is concerned that deflationary forces continue to remain below the surface. Labor markets are still weak, suggesting demand could be dull after the euphoria of releasing COVID-19 locks passes.

It is an enigma, and it will not be solved by looking at some title numbers like the KPI and the unemployment rate. So, the Financial Mail assembled a set of indicators in an attempt to recreate the panel that Macklem could use to help him decide the trajectory of interest rates. When most of the measures have passed their pre-pandemic levels, Macklem and deputies at the Bank of Canada will likely be ready to start raising interest rates. As a quick scan of the dials will show, this will not happen any time soon.

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