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Toward 2021: Consultations with Canadians

In 2021, the Bank of Canada and the federal government renewed the agreement on Canada’s monetary policy framework. To inform our discussions, the Bank conducted a broad range of public outreach activities between 2019 and 2021. This report summarizes our findings.

We would like to thank the thousands of Canadians who took the time to offer their views throughout these consultations.

At the Bank, we are committed to accountability and transparency in everything we do. The actions we take and how well we do our work affects the lives of every Canadian.”

Tiff Macklem, Governor

Time for renewal

Every five years, the Bank and the Government of Canada review and renew the agreement on the Bank’s monetary policy framework. This agreement will be renewed in 2021.

In the years leading up to each renewal, the Bank conducts extensive research and consults experts on key issues affecting the conduct of monetary policy.

For the 2021 renewal, we broadened our outreach activities to include a larger number of individual Canadians and public interest groups. We did so for several reasons:

  • For the first time in 30 years, we are comparing the inflation-targeting framework with several alternatives:
    • average inflation targeting
    • a dual mandate, targeting both inflation and employment
    • nominal gross domestic product (GDP) targeting
    • price-level targeting
  • Since the global financial crisis in 2008, central banks have implemented extraordinary policies and used a variety of new tools. This increased activity has put central banks in the public eye more than ever before. Public outreach is a key opportunity for central banks to assess the economic environment, gather input and ensure their policies and decisions reflect the views of the people they serve. This, in turn, reinforces public trust.
  • Gathering a more diverse range of views on the Bank’s activities, frameworks and decisions ultimately leads to better policy outcomes.

Listening to Canadians

Clear and timely communications matter when conducting monetary policy. Whichever approach we adopt for our framework, it will be more effective if Canadians understand it well.

Consider inflation targeting, for example: when inflation remains close to its 2 percent target for a long time, people start to expect it to stay there. This expectation helps all Canadians plan their purchases, investments, salary requirements and budgets—and what results is a feedback loop that helps tie inflation to its target.

Four goals guided our consultations. We wanted to:

  • gain a better understanding of the concerns Canadians currently have about the economy and economic policy
  • learn how our existing inflation-targeting framework affects different groups of Canadians and how the alternative approaches being considered might affect those groups
  • assess how well people understand the different monetary policy frameworks and their trade-offs
  • gauge people’s awareness, understanding and support of unconventional policy tools

What we did

To gather this broader input, we extended our public outreach activities to include:

  • surveys, including a comprehensive online public consultation (see Appendix 1)
  • focus groups, including a multi-week online community conversation (see Appendix 2)
  • round-table discussions with civil society, labour and business groups (see Appendix 3)
  • open invitations for written submissions (see Appendix 4)

We reached out to Canadians of all ages across the country and conducted these activities in person—before the COVID‑19 pandemic—and online. Appendix 5 provides additional information about our consultations with economists and policy experts.

What we heard

The current economy and the Bank

We learned that Canadians’ trust in the Bank and the financial system remained steady or increased slightly during the COVID‑19 pandemic. That said, people have clearly become more concerned about the future health of the economy and their finances.

In particular, focus group participants voiced concerns about the costs of urban housing:

  • rising far beyond the 2 percent inflation target
  • growing faster than wages

These growing costs, they said, make it much harder for people to become homeowners. As a result, they felt this widens the divide between the rich and the poor, which negatively affects social cohesion.

Other respondents worry about:

  • high levels of household debt and the cost of housing
  • job insecurity
  • wealth inequality

They said that they have shifted their purchasing habits away from discretionary spending and toward buying only essentials. These respondents felt that having an inflation target that maintains the inflation rate at a manageable level provides more certainty for both short- and long-term budgeting.

Across all our consultation activities, some people indicated they are unfamiliar with the Bank’s work and mandate but appreciated the opportunity to learn and participate. Indeed, many said they’d like to see us do more to educate Canadians about our work.

Unprompted, some representatives from organizations in our round-table discussions expressed concerns about the undermining of central bank independence. They stressed the importance of the Bank’s independence given the current environment, where there is a growing perception that central banks are being influenced by political considerations.

Some also raised concerns about the impact of climate change on low-income households, specifically in terms of recovery from natural disasters, such as tornadoes or flooding. They explicitly stated that the Bank should choose a framework that best supports climate change mitigation and the transition to clean energy.

Perceptions of inflation

A lot of Canadians have confidence in the Bank’s ability to keep inflation on target. Across all demographics (including age, gender, income and level of education), most people said they would prefer to have stable and predictable inflation so they can plan their budget. Others were more specific and said they wanted to prepare for retirement and generate wealth.

Overall, people generally worried about rising costs and felt that those who live on fixed incomes, low-wage earners and seniors are most affected by rising inflation.

Many felt that the 2 percent target does not accurately represent inflation, pointing to the prices of numerous goods and services that have increased by more than that in recent years. People see inflation mostly in:

  • their grocery and restaurant bills
  • the costs of household operations—such as utility bills and furnishings
  • transportation costs

Participants in focus groups and round-table discussions told us that the consumer price index (CPI) does not effectively capture the:

  • rising costs of certain goods and services—for example, food prices in remote communities and education costs
  • growth in housing prices across the country

Many questioned how CPI is calculated. They asked whether the particular goods and services used to measure inflation and the demographic of an average Canadian were still relevant. Appendix 6 describes how we explored consumers’ perceptions of inflation.

Monetary policy frameworks

Inflation targeting

Overall, most people we heard from supported the continued use of inflation targeting as the Bank’s approach to monetary policy. They recognized that a targeted range for inflation:

  • works well for different economic situations
  • allows for a smoother adjustment in interest rates over a longer time period

Most respondents also said they would prefer an approach that balances the level of interest rates to benefit both savers and borrowers. Additionally, the majority viewed inflation targeting as the most easily understood approach.

Most people knew that inflation targeting helps keep the prices of goods and services under control. And the majority intuitively understood the relationship between inflation and interest rates. A significant proportion of participants were aware that the Bank targets inflation and sets the key interest rate.

Canadians reported that they believe we have achieved the inflation target in the past and were highly confident that we can do so in the future. But fewer understand why the target is set at 2 percent.

Many people said they would like the Bank to spend more time discussing economic issues that matter to working people, including how monetary policy can influence the evolving labour market. Labour groups, as well as some civil society organizations, academics and parliamentarians, supported adding an additional objective to our monetary policy framework: targeting full employment.

Another theme that emerged from round-table discussions and focus groups was the concern about the growing gap between the “haves” and the “have nots.” Some participants emphasized that monetary policy can have an impact on economic inequality and social cohesion. However, they noted that it is not achieving its full potential because it is not reaching some parts of the economy. Examples that people pointed to include remote and Northern communities where prices are disproportionately high and fluctuating, as well as Indigenous Peoples who face challenges associated with access to credit.

In contrast, others said we shouldn’t focus on any specific group when making interest rate decisions.

The majority of people we heard from preferred that the Bank be flexible. They were most comfortable with an approach that targets a range for inflation and adjusts monetary policy gradually to achieve that target. Further, when given a choice between having us maintain the inflation-targeting approach or shift our focus to economic growth or full employment, a large number chose inflation targeting. They worried that other factors beyond the Bank’s control could affect the Bank’s ability to successfully achieve these alternative objectives.

Alternative approaches

When asked to identify an alternative framework that they thought was better than the Bank’s current approach, people questioned how:

  • easily a change in the monetary policy framework could occur
  • achievable it might be
  • significantly Canadians might be affected by it

They also asked why the Bank is considering a change in approach now and how the decision would be made.

Nevertheless, people saw value in the alternative frameworks—in particular, average inflation targeting and the dual mandate. Most felt both of these concepts were relatively easy to understand. Nominal GDP targeting and price-level targeting were the least favoured options. This is likely because they were harder to relate to compared with the other two and were considered more difficult for the Bank to achieve.

Average inflation targeting

Overall, many suggested that average inflation targeting offers the Bank greater flexibility and allows the economy to recover faster from a downturn, which was a perceived benefit. Canadians felt a greater sense of trust that this framework would maintain stable prices. However, some reported concerns about how longer periods of high or low inflation could affect them and the affordability of day-to-day items during these “make-up” periods.

Dual mandate

A dual mandate—targeting both inflation and full employment—was seen as another good option for the Bank. However, in our focus groups, many participants didn’t fully grasp the connection between employment and inflation, although they generally supported the idea of targeting both to encourage job growth.

Many participants appreciated the flexibility a dual mandate could offer and liked the idea of a sustained and healthy job market. In particular, labour group members viewed access to stable employment and a livable wage as most important and relevant for Canadians and favoured this approach. That said, many people were skeptical about whether full employment could be reached, given that other factors beyond the Bank’s control could affect job market conditions.

Some people also struggled to understand how changing interest rates could affect hiring and what types of jobs would be created (minimum-wage versus high-paying). They worried about whether inflation would rise too high and reduce the purchasing power of their wages if employment became the focal point.

Interestingly, a dual mandate was the most polarizing option in our online consultations and focus group discussions:

  • Some respondents questioned the effectiveness of a dual mandate in a situation such as the COVID‑19 pandemic, where the higher unemployment rate is due to containment measures and lockdowns. They believed there was little that monetary policy could do in such circumstances.
  • Others felt it would be appropriate to target both inflation and employment because it would help ensure a healthy job market, especially in circumstances like a pandemic.
  • Some participants thought it might go a step too far and cause the Bank to become influenced by political considerations.

Unconventional tools

Our policy tool kit is a critical part of our monetary policy framework. It provides a range of instruments that can be implemented in extraordinary circumstances, such as when the key interest rate is at its lowest, to keep the economy stable. Since the onset of the COVID‑19 crisis, the Bank has been purchasing government bonds as part of its quantitative easing (QE) program. This program:

  • aims to make longer-term borrowing cheaper for businesses and households
  • signals that interest rates are set to stay lower for a longer period

In our cross-Canada online public consultation, we asked about the Bank’s QE activities. Just over half of respondents said they were aware that the Bank has been conducting these large-scale purchases to help the economy during the pandemic. The majority supported this approach and felt the Bank should continue making these purchases as needed.

Almost two-thirds of participants thought it was a good idea for the Bank to:

  • indicate that interest rates will remain low during the pandemic
  • provide general guidance around the future path of interest rates

However, almost three-quarters of respondents opposed the use of negative interest rates when the economy is in trouble.

What we learned

Low and stable inflation is a priority

Overall, Canadians support low and stable inflation. They recognize that it:

  • helps keep the prices of goods and services under control
  • allows them to plan for the future
  • contributes to overall economic stability—which many people value

Not everyone we heard from was familiar with the inflation target and how it’s achieved—but after this approach was explained, it seemed to be the easiest to understand and relate to. That said, many participants questioned how inflation is measured because the reported rate of inflation does not appear to reflect everyone’s experience.

More relatable communication

Numerous respondents noted that we could better communicate about our work by providing more engaging and real-life examples of how our decisions can affect different groups of Canadians. Suggestions included:

  • using more relevant examples that show how the Bank’s decisions affect people in different stages of life as well as the prices of everyday products and big-ticket items
  • providing web-based tools to help Canadians calculate what different inflation rates can mean for their personal circumstances

Openness to change

Regarding alternative approaches for monetary policy, most participants appreciated the flexibility that both the dual mandate and average inflation targeting frameworks offer.

People were receptive to longer periods of higher or lower inflation to support economic recovery or to retain a healthy job market. However, they voiced concerns about how this would affect their personal finances, particularly in the long run.

While many respondents considered average inflation targeting to be feasible, they doubted the Bank’s ability to implement a dual mandate.

Generally, when given the choice between the Bank’s current inflation-targeting approach and an alternative framework, most opted for our existing approach. Participants perceived it to be easy to understand and the most achievable option, given the Bank’s tools.

Unusual but appropriate measures

In terms of unconventional tools, respondents generally support the Bank’s current quantitative easing program and our general guidance around the future path of interest rates. Most agreed that we should signal that interest rates will remain low during the pandemic. However, an even greater proportion of participants opposed the use of negative interest rates if the economy was in trouble.

Appendix 1: Surveys

Annual Public Awareness survey

  • Methodology: online survey, administered by a large polling firm on behalf of the Bank of Canada
  • Timing: annually, in February or March, with pulse-checks later in the year
  • Number of participants: approximately 2,200 for the annual survey and 1,000 for the pulse checks
  • Demographics: nationally representative

This annual survey aims to explore Canadians’ views about the economy and the Bank. Several questions relate to the renewal of the Bank’s monetary policy framework.

In the February 2020 survey:

  • 53% of respondents trust the Bank to ensure Canada’s financial system functions well
  • 46% trust the Bank to maintain a low and stable inflation rate
  • 49% trust the Bank to contribute to the successful management of the economy


In light of the COVID‑19 pandemic, two short pulse-check surveys were added in 2020: in May, after the onset of the pandemic, and in September, when the country was settling in for the long haul. The May and September results revealed shifts in public opinion.

Today versus tomorrow

Canadians with positive perceptions of the current state of the economy
February 2020 48%
May 2020 17%
September 2020 25%
Respondents who believe the state of the economy will improve in the future
February 2020 22%
May 2020 32%
September 2020 29%

When asked about their current financial situation, in September 50% of respondents said it was “good” and another 26% said it was “average” or “about the same.” However, people felt differently about their future financial state:

  • 22% thought it would improve
  • 60% thought it would remain about the same

Growing interest

Share of respondents who believed the Bank’s decisions affect their lives
February 2020 48%
May 2020 56%
September 2020 57%
Share of respondents who are interested in economic news and analysis
February 2020 39%
May 2020 48%
September 2020 47%

Trust in the system

Canadians with pride and confidence in the banking system
February 2020 45%
May 2020 50%
September 2020 55%
Canadians who are confident that the financial system is safe and secure
February 2020 47%
May 2020 50%
September 2020 53%

Belief in the Bank

Share of Canadians who express overall trust in the Bank
February 2020 48%
May 2020 48%
September 2020 50%
Share of Canadians who believe that the Bank is doing a good job at controlling inflation
February 2020 39%
May 2020 50%
September 2020 52%
Share of Canadians who believe that the Bank is doing a good job at helping stabilize the economy
February 2020 N/A
May 2020 43%
September 2020 46%
Percentage of Canadians who are aware that the Bank cut its key interest rate to support the economy
February 2020 N/A
May 2020 60%
September 2020 52%

About 22% of respondents were aware that the Bank is buying government bonds and 58% were in favour of this action.

Canadian Survey of Consumer Expectations

  • Methodology: online survey, administered by a large polling firm on behalf of the Bank
  • Timing: quarterly, in February, May, August and November
  • Number of participants: approximately 2,000 heads of households
  • Demographics: nationally representative sample of adult residents of Canada aged 18 or older

This survey gathers Canadians’ views on:

  • inflation
  • the labour market
  • household finances
  • topical issues of interest

In late 2019, we added several questions to the survey to assess the public’s knowledge of the Bank’s inflation-targeting framework.

  • 94% of respondents said it was “somewhat important” or “very important” that Canada have low and stable inflation
  • 62% said the Bank is responsible for inflation targeting, but only 35% of respondents knew that an inflation target exists
  • 74% knew the Bank sets the key interest rate in Canada
  • 85% said the Bank has achieved its inflation target in the past “some of the time” or “most of the time”
  • 88% said the Bank would achieve its inflation target in the future “some of the time” or “most of the time”

Let’s Talk Inflation public consultation

  • Methodology: online survey, administered by an online engagement firm on behalf of the Bank
  • Timing: August to September 2020
  • Number of participants: more than 8,500 Canadians from across the country
  • Demographics: 70% were male; 46% were between the ages of 25 and 44

Canadians were invited to share their financial concerns and their views about the:

  • economy
  • Bank of Canada
  • inflation-targeting framework

Views on inflation

  • 55% said that 2% is an unrealistic inflation target, and 66% think inflation in Canada is higher than that
  • 56% worry “a lot” about the rising cost of goods and services, while 35% said they worry “somewhat” about this
  • 80% said they favour a targeted range for inflation rather than a fixed target
  • 67% said they prefer a slower return to the 2% target, with smoother adjustments in interest rates over a longer period of time, instead of sharp, rapid changes to the interest rate
  • 53% said having stable and predictable inflation was most important, while other participants’ top priorities were:
    • steady economic growth (27%)
    • maximum sustainable employment (20%)

Alternative approaches

Participants also shared their thoughts on alternative approaches to the Bank’s current monetary policy framework. Inflation targeting was ranked the easiest to understand, followed by the dual mandate, average inflation targeting, price-level targeting and nominal gross domestic product (GDP) targeting.

Average inflation targeting

Around 80% of respondents said average inflation targeting was easy or somewhat easy to understand. Slightly more than 40% said it would be easy or somewhat easy to achieve. When asked if it would be better than the Bank’s current approach, participants were almost equally split across “Yes,” “No” and “I don’t know” responses.

Dual mandate

About 80% said the dual mandate was easy or somewhat easy to understand, but:

  • almost 60% felt it would be difficult to achieve
  • nearly 40% didn’t think it would be an improvement over the current framework
Nominal GDP growth targeting

While 70% said nominal GDP growth targeting was easy or somewhat easy to understand, 54% thought it would be difficult or somewhat difficult to achieve. Close to 50% said it would not be a better option than the current framework.

Price-level targeting

Results for price-level targeting were mixed: 76% said it was easy or somewhat easy to understand, and 62% said it would be difficult or somewhat difficult to achieve. When asked whether it would be better than the current framework:

  • almost 40% said no
  • only 30% said yes
  • 32% said they didn’t know

Unconventional tools

On negative interest rates:

  • 73% did not think that the Bank should consider negative interest rates if the economy was in trouble

On quantitative easing:

  • 75% said they were aware that the Bank has been buying large amounts of government bonds
  • 45% said the Bank should consider quantitative easing to target longer-term interest rates

On forward guidance:

  • 67% said giving an interest rate signal is a good idea

Appendix 2: Focus groups

2019: In-person and online discussions

  • Methodology: six in-person focus groups in three large cities (Toronto, Montréal and Vancouver) and two online sessions with people living in medium- and small-population centres as well as rural areas, administered by a large polling firm on behalf of the Bank
  • Timing: November and December 2019
  • Number of participants: approximately 60 participants in the in-person focus groups and close to 40 participants in online discussions
  • Demographics: not available

In 2019, the Bank of Canada commissioned focus groups in person and online with Canadians across the country to gain a better understanding of:

  • how different socio-economic groups experience inflation
  • the general awareness, knowledge and perceptions of our current inflation-targeting framework
  • how changes to the framework could affect different segments of the Canadian population

Participants were asked to list some of their biggest concerns about the economy. In general, most focused on:

  • cost of living (including prices of goods and services, bills, debt, mortgages)
  • wages
  • wealth inequality
  • financial well-being

When asked what they think of when they hear the word “inflation,” respondents stated:

  • “Rising pressure on us [citizens] to provide more services for people who are left behind by wages that are not keeping up with living costs.”
  • “The cost of everyday necessities going up while my wages stay stagnant.”
  • “Inflation is a major concern to me. I am retired and worry about outliving my savings as everything gets more expensive.”

Participants were also asked about Canada’s inflation target. Those who were familiar with the target said it helps to:

  • keep the prices of goods and services under control
  • allow for cost certainty for budgeting

Those who were not familiar with the target assumed that it helps to stabilize the Canadian economy, ensure steady economic growth and incentivize consumer behaviour. Participants were shown a video explaining how inflation targeting works. Some understood the concept easily, but others had more difficulty:

  • “Makes sense. If the targets are so high, we won’t be able to afford a lot of things. It would be like going back in time.”
  • “I don’t understand how it can control the market. You can make the target 1 percent or 3 percent, but if tomorrow we don’t have supply [to meet demand], the price [of goods] is going up. You can do nothing.”
  • “I don’t see how you can control inflation. If the Bank of Canada sets this target, how do they implement it?”

Respondents had different opinions when asked whether inflation, as measured by Statistics Canada, is accurate. Many were confused about why the target is set at 2 percent. Some suggested that this is the target because that’s a manageable percentage; others suggested it was the “optimum rate” or “sweet spot.”

  • “I view it as accurate because I don’t have any information to state otherwise.”
  • “It doesn’t seem accurate. It seems costs, especially food, have risen more. No idea why it is set at 2 percent.”
  • “The basket included things that you need daily, but it didn’t mention rental prices or house prices. Those have gone completely out of control.”

When asked about inflation and employment, most struggled to explain the link. After receiving additional explanation, some were able to understand the concept better and even discussed the relationship between wages and economic performance.

  • “If employment is too high (unemployment too low) that would cause higher inflation.”
  • “Inflation is a sign of growth. More inflation means more growth in prices. If you have low unemployment that means more people are working and spending and that drives up prices.”

Participants generally understood the relationship between interest rates and inflation. Most recognized that changes in the interest rate are related to changes in inflation. They also felt that a balance between interest rates and inflation would help stabilize the economy.

A discussion of the benefits of setting an inflation target produced this comment:

  • “If people can’t afford housing or food, that’s not good. It’s about social cohesion, and we can see that in other countries around the world.”

In contrast, when talking about drawbacks to setting a target:

  • “There are none that I can think of, other than setting a bad target.”
  • “Wages will stagnate.”

When offered a choice between maintaining the inflation target or shifting the focus to growth or full employment, most preferred keeping the existing target.

2021: Online community

  • Methodology: weekly online engagement exercise on a moderated platform, administered by a large polling firm on behalf of the Bank
  • Timing: January 2021
  • Number of participants: approximately 200 participants each week
  • Demographics: more than 50% of respondents were women, and the majority of participants were over 50 years old

In January 2021, we commissioned an online-based community engagement exercise to gather insights on whether the proposed communications on some of the alternative frameworks being considered were understandable and relatable.

Simplified descriptions of each framework were prepared in both text and video formats, explaining:

  • the overall framework
  • why the Bank would choose this option
  • how it would affect Canadians

Participants were asked to comment on the communications products and what they viewed as positive and negative about the frameworks presented:

  • When asked why keeping inflation on target is important, the majority chose “To keep the economy stable and employment sustainable” as the top reason.
  • Many participants stated that the current framework was the easiest to understand.
  • Among the alternatives presented, average inflation targeting was easiest to understand because it is most similar to the current approach. However, participants wanted additional information on how it would affect the affordability of day-to-day items during the “make-up” periods.
  • A dual mandate was the most polarizing of all the alternative frameworks. Some participants believed that focusing on employment in addition to inflation was relevant in the current climate. However, others were concerned that the benefits of full employment were less tangible. Overall, most participants found it difficult to understand how and if a dual mandate would work. They questioned how changes in inflation would encourage hiring and what types of jobs would be created.
  • Many participants provided recommendations on how we could better communicate about our work and mandate by providing more relatable, engaging and real-life examples of how our decisions affect different groups of Canadians. They also suggested providing web-based tools to help Canadians calculate what different inflation rates can mean for their personal circumstances.
  • Participants also wanted to better understand why the Bank is considering changing its monetary policy framework now, given that the current framework has been working well for more than 30 years. They also wanted to know why one framework is chosen over another.

Participants consistently didn’t understand how the various frameworks would affect their personal finances or spending habits. That said, they did care about rising living costs, and many commented that wages and government benefits do not increase at the same rate. In terms of borrowing and spending, around 50 percent of respondents agreed that interest rates affect their decision-making process.

Overall, people tended to prefer the video over text, particularly those who are visual learners. There was a general sense that the information was easier to understand in this format. However, most participants found both formats complemented each another.

Many said they felt more informed about the economy and inflation—and the fact that there is a target—after reading the materials provided. However, some suggested the text could be more relatable and engaging if real-life examples or charts were provided.

Appendix 3: Round-table discussions

  • Methodology: in-person meetings, led by the Bank
  • Timing: June to December 2019
  • Number of participants: 13 national civil society groups
  • Demographics: not applicable

In the second half of 2019, Bank of Canada staff met with 13 national civil society groups1 to discuss inflation and monetary policy as well as their particular economic priorities and concerns. These conversations took place before the COVID‑19 pandemic began.

Although inflation was not the top issue for all groups, many were concerned about the rising prices of specific goods and services. Participants also commented on a range of other issues.

Housing costs

Many participants noted that higher housing prices are affecting labour market availability and social activities in major urban centres.

Consumer price index

Some groups said the consumer price index does not reflect their reality. Canadians experience inflation differently, depending on their financial circumstances or where they live. For example:

  • Students said that tuition is rising more than 2 percent per year, and the prices of goods and services—including textbooks—are increasing at a much higher rate than inflation. At the same time, some student aid programs, such as Canada Student Loans, have a fixed allocation rate that has not increased since 2004.
  • Other groups noted that Indigenous people in remote communities:
    • pay more for their purchases
    • have difficulty borrowing money
    • pay high interest rates when they obtain loans

Labour market

Participants told us that by focusing only on inflation targeting, the Bank has overlooked structural shifts in the economy and the evolution of the labour market. For example:

  • The appreciation of the exchange rate from 2002 to 2008 had a significant impact on Canada’s manufacturing sector.
  • New structural changes, such as the gig economy and climate change, currently affect employment.


One group reported that low interest rates have contributed to housing inflation. Access to affordable housing is critical for low-income earners and employers because wages are sensitive to housing costs. The low interest rate environment has also had a negative impact on pension plans.

Climate change

One group said the Bank has an important role to play in addressing climate change. Because the Bank is a trusted institution, its research and analysis can help foster public discussion about climate impacts and the search for solutions.

The Bank’s mandate

Attendees from non-labour, non-business organizations were unfamiliar with the Bank and monetary policy but expressed a desire to learn more about the Bank’s work.

Central bank independence

Without prompting, representatives from several organizations voiced their concerns about the Bank’s independence. They stressed its importance in the current environment, where there is a growing perception that central banks are being influenced by political interference.

Appendix 4: Written submissions

The Bank of Canada posted an open invitation on its website for Canadians to send formal submissions, such as official letters or papers, to express their views about the monetary policy framework and what they think the Bank’s priorities should be. We received seven submissions from various organizations, academics and economists, including: 

  • a note from Competition Bureau Canada’s Commissioner of Competition
  • a submission from Greenpeace

In their submissions, people shared their views on the country’s economic priorities and how those views align with the Bank’s current frameworks, tool kits and policies. They also provided their perspectives on what factors the Bank should consider during this review period.

Appendix 5: Consultations with economists and policy experts

In addition to consultations with the public, the Bank of Canada routinely conducts extensive policy research before the renewal of the monetary policy framework.

For this renewal, the Bank:

  • hosted conferences and invited experts from other central banks, universities and think tanks
  • participated in a conference on the renewal hosted by McGill University
  • researched and published staff papers—some with co-authors from other institutions—on alternative frameworks
  • reviewed a letter signed by 61 Canadian economists urging the federal government to instruct the Bank of Canada to expand its monetary policy framework and consider not only inflation but also full employment when making interest rate decisions

We also delivered presentations to the Standing Senate Committee on Banking, Trade and Commerce and to new members of Parliament.

Toward 2021: Renewing the Monetary Policy Framework presents the results of our research.

Appendix 6: Inflation—perceptions versus reality

Surveys conducted by the Bank of Canada show that many consumers perceive inflation to be higher than its measured level and its target. As part of the Bank’s research for the 2021 inflation-target renewal, we wanted to test the accuracy of this perception and to better understand it.

The inflation rate that guides the Bank’s decisions is the consumer price index (CPI). Statistics Canada uses the CPI to track:

  • how much the average Canadian household spends
  • how household spending changes over time

Using its Survey of Household Spending, Statistics Canada estimates what an average household includes in its “shopping basket.” This basket includes about 700 goods and services that Canadians typically buy.

Working together, Statistics Canada and the Bank tested consumers’ perceptions that inflation is higher than the CPI. To do this, we constructed a shopping basket and inflation rate for different groupings of households based on:

  • income
  • education
  • age
  • whether they are renters or homeowners

We found that the inflation rates constructed for specific consumer groupings were similar to the measured CPI inflation rate. Participants’ reactions to the Bank’s response to COVID‑19 indicated a slight but limited shift in this finding. See Perceived Inflation and Reality: Understanding the Difference for more information.

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  1. 1. The Bank met with the Business Council of Canada, Canadian Labour Congress, CARP, Canadian Alliance of Student Associations, Consumers Council of Canada, Fédération des chambres de commerce du Québec, Federation of Canadian Municipalities, Imagine Canada, Retail Council of Canada, Philanthropic Foundations Canada, Tulo Centre of Indigenous Economics, United Way Toronto and United Way Centraide Canada.[]