Rhys R. Mendes was appointed Managing Director of Economic and Financial Research, effective June 2016. In this capacity, he works with policy department chiefs, research directors and their departmental teams to develop and execute a leading-edge research work plan to support all of the Bank of Canada’s policy functions.
Mr. Mendes joined the Bank in 2004 as an Economist in what was formerly the Monetary and Financial Analysis Department. In December 2005, he moved to the Research Department, now Canadian Economic Analysis (CEA). He became an Assistant Chief of that department in November 2008, leading the team responsible for the development of ToTEM II, an updated version of the Bank’s main macroeconomic model. In June 2011, Mr. Mendes was appointed Director of Policy Analysis in the International Economic Analysis Department, where his duties included representing Canada at G20 meetings and other international forums. Before his current role, he was Deputy Managing Director of CEA, a position he was appointed to in 2013.
Throughout his career, Mr. Mendes has contributed to the Bank’s research on the monetary policy framework. He is regularly consulted by foreign central banks on framework design issues. In March 2006, Mr. Mendes was on secondment to the International Monetary Fund as an advisor to the Indonesian central bank.
Born in Richmond Hill, Ontario, Mr. Mendes holds a PhD in economics from the University of Toronto.
For central banks, conducting policy in an environment of uncertainty is a daily fact of life. This uncertainty can take many forms, ranging from incomplete knowledge of the correct economic model and data to future economic and geopolitical events whose precise magnitudes and effects cannot be known with certainty.
Since 2012, business investment growth has slowed considerably in advanced economies, averaging a little less than 2 per cent versus the 4 per cent growth rates experienced in the period leading up to crisis. Several recent studies have attributed a large part of the weakness in business investment to cyclical factors, including soft aggregate demand, and, to a lesser degree, heightened uncertainty and tighter financial conditions.
Conventional models imply that central banks aiming to raise inflation should lower nominal rates and thus stimulate aggregate demand. However, several economists have recently challenged this conventional wisdom in favour of an alternative “neo-Fisherian’’ view under which higher nominal rates might in fact lead to higher inflation.
Bank of Canada research done prior to the most recent renewal of the inflation-control agreement in 2011 concluded that the benefits associated with a target below 2 per cent were insufficient to justify the increased risk of being constrained by the zero lower bound (ZLB) on nominal interest rates.
“Chair’s remarks: Understanding commodity price cycles in emerging Asia and their implications for monetary policy” In Globalisation and inflation dynamics in Asia and the Pacific, BIS Papers No. 70, pp. 67-69, January 2013, Bank for International Settlements.