Bank of Canada governor Mark Carney has a lot of explaining to do this week.

With the central bank due to issue the scheduled interest rate announcement tomorrow and the quarterly Monetary Policy report Thursday, economists and investors are awaiting what Carney has to say about what looks like an economy on a razor’s edge between recession and recovery.

Tomorrow’s headline decision on interest rates is a no-brainer.

As the central bank announced in April, the policy rate is to stay at the practical 0.25 per cent floor until at least next spring barring any nasty surprises. That means borrowing costs tied to the central bank rate and the banks’ prime rate — many types of mortgages, lines of credit, as well as consumer and car loans — will remain stable for at least another year.

But the question is what will Carney say about the economy, for the rest of this year and going forward?

And will Carney begin hinting about exit strategies from some of the extraordinary measures the bank and the federal government have introduced to keep the money markets functioning during the crisis?

Carney's call for the economy to shrink by three per cent this year will almost certainly be revised because it was based on the first quarter coming in at negative 7.3 per cent, instead of the 5.4 per cent Statistics Canada later reported.

The consensus is now for the shrinkage to be held at 2.3 per cent, a significant difference in a $1.5-trillion economy.

In April, Carney also unveiled the bank’s options for intervening in financial markets through so-called quantitative and credit easing — the short-term purchase of government and corporate bonds to pump cash into the economy and ease the credit crunch for consumers and businesses.

“It was a masterful explanation of what might happen because it explained it clearly, but also because it dampened expectations of the bank actually doing it,” said Robson.

The bank governor has taken some grief in the past over what many believed was an overly optimistic view about the Canadian economy’s ability to recover.

Now with conditions materially improving, Robson believes he has some reason to crow — in cryptic bank speak, of course.

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