Canada's Dead Cat Bounce

Once again, the central banker spins a tale of growth.

Time will tell what is true.

I maintain the view that we are in a debt deflationary environment that will produce much more downside than any of the Keynesian central banker is willing to admit.

Bank of Canada says economy is bouncing back

OTTAWA — When it comes to telegraphing monetary policy, the Bank of Canada governor has sent the clearest signal yet that higher borrowing costs are off the table, for now.

After weeks of market speculation, Mark Carney attempted Wednesday to draw a line through that uncertainty, saying “the case for adjustment in interest rates has become less imminent.”

“Given that we are in an expansion, not a recovery . . . over time, rates are more likely to go up than not.” Mr. Carney said, speaking to reporters following the release of the bank’s quarterly Monetary Policy Report (MPR).

But he cautioned: “The world is a big uncertain place. There’s lots of volatility out there.”

For several years Mark Carney has been hinting (or threatening) to hike interest rates in Canada.  With this latest comments, we know that the bank governor is simply trying to "talk down" personal debt levels and the housing market.  If the governor was to be intellectually honest, it is plain to see that there is no sustainable recovery in Canada without some true growth in the United States, the destination of 75% of Canada's exports.

My interpretation of the Bank of Canada governors latest words can be shown best by the following picture.