Canadian Fin Min fretted after BOC hikes but a staff report told him to calm down
Memo said rate hikes wouldn't hurt economy
Last summer, the Canadian government and Bank of Canada had two distinct views on the economy. The government was worried and a huge stimulus package was just starting to help; the BOC was ready to hike rates.
There was some initial tension when the BOC surprised everyone by signaling a hike in July but that slowly faded.
One reason might be an analysis delivered to Finance Minister Bill Morneau that assumed him that hiking rates gradually -- to 1.50% at the end of 2018 -- would be easily absorbed by a growing economy.
"Given the slow and gradual character of this expected tightening cycle, it is most likely that the economy will very steadily absorb projected interest rate increases," the 11-page memo said.
Bloomberg obtained the report via a Freedom of Information request.