While central banks cannot provide complete foresight with respect to their future policy actions, it is in the interests of both central banks and market participants that central banks be transparent about their reaction functions and how they may evolve in response to economic developments, shocks, and risks to their outlooks.
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.
In this paper, we analyze the presence of time variation in the pass-through from the nominal effective exchange rate to import prices for 24 advanced economies over the period 1995–2015. In line with earlier studies in the literature, we find substantial heterogeneity in the level of exchange rate pass-through across countries.
MONTRÉAL, QUEBEC—The fundamental forces that have always driven inflation will continue to do so, even as the global economy evolves, Bank of Canada Governor Stephen S. Poloz said today. In a speech to CFA Montréal and the Montreal Council on Foreign Relations, Governor Poloz challenged the idea that recent softness in inflation in many advanced […]
In the past few years, many have postulated that the possible disinflationary effects of digitalization could explain the subdued inflation in advanced economies. In this note, we review the evidence found in the literature. We look at three main channels.
Good afternoon, Mr. Chairman and committee members. Senior Deputy Governor Wilkins and I are pleased to be back before you today to discuss the Bank’s Monetary Policy Report (MPR), which we published last week. When we were last here in April, we were celebrating the fact that we had upgraded our economic forecast following a […]