Monetary policy

• June 17, 2025

  Understanding our policy interest rate

  At the heart of the Bank of Canada’s monetary policy is the target for the overnight rate. See what it is—and what it means for you.

  Content Type(s): Explainers Research Topic(s): Monetary policy

• Assessing the US and Canadian neutral rates: 2025 update

  Staff Analytical Note 2025-16 Frida Adjalala, Felipe Alves, William Beaudoin, Hélène Desgagnés, Wei Dong, Ingomar Krohn, Jan David Schneider

  We assess both the US and Canadian nominal neutral rates to be in the range of 2.25% to 3.25%, unchanged from the range assessed in 2024.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Economic models, Interest rates, Monetary policy JEL Code(s): E, E4, E40, E43, E5, E50, E52, E58, F, F4, F41

• Potential output in Canada: 2025 assessment

  Staff Analytical Note 2025-14 Selam Abraham, Dany Brouillette, Alex Chernoff, Christopher Hajzler, Stéphanie Houle, Mark Kim, Temel Taskin

  We explore two scenarios for potential output growth to gain insights into the economic consequences associated with different possible trade policies. Scenario 1 includes limited US tariffs on Canadian exports. Scenario 2 adds a permanent, broad-based 25% increase in US tariffs on imports from all countries excluding Canada and Mexico.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Economic models, Labour markets, Monetary policy, Potential output, Productivity JEL Code(s): E, E2, E3, E4, E5

• Monetary policy, interest rates and the Canadian dollar

  Staff Analytical Note 2025-2 Jean-Sébastien Fontaine, Ingomar Krohn, James Kyeong, Rishi Vala, Konrad Zmitrowicz

  Changes in domestic interest rates affect the value of the Canadian dollar less than changes in the risk premium do. These variations often occur when a broad shift in risk sentiment occurs in global markets. Ultimately, the value of the currency reflects long-term, slow-moving features of the economies.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Asset pricing, Econometric and statistical methods, Exchange rates, Interest rates, Monetary policy JEL Code(s): E, E4, E43, F, F3, F31, G, G1, G12
• February 3, 2025

  Understanding quantitative easing

  QE is a tool that encourages spending and investment—helping us to achieve our inflation target by stabilizing the economy.

  Content Type(s): Explainers Research Topic(s): Inflation targets, Monetary policy