Governor's foreword

The last few years have been tough for Canadians and challenging for the Bank of Canada. But as 2024 ends, our economy is in much better shape. So, by way of introduction to this Annual Report, I hope you will permit me an un-Canadian boast on behalf of all the dedicated employees at the Bank—because I know they won’t do it themselves.

The last five years have been the biggest test of Canada’s inflation-targeting framework since its inception over 30 years ago. I won’t pretend we got everything right. Nor will I minimize the burden of elevated inflation and higher interest rates on households and businesses.

But it’s worth heralding 2024 as the year we returned inflation to target. Since the summer, inflation has hovered around the 2% target, and it ended the year at 1.8% in December. Notably, we navigated our way back to 2% inflation without triggering a recession. Yes, economic growth was modest in 2024—but the economy continued to expand and add jobs, even as inflation came down.

With inflation moving towards our target, we began lowering interest rates in June, and we cut our policy rate at the four remaining monetary policy decisions in 2024. This included three cuts of 25 basis points and two larger cuts of 50 basis points, lowering the policy rate by a total of 175 basis points—from 5.0% to 3.25% by the end of 2024.

Guided by our inflation-targeting framework, we took forceful action to control inflation in 2022 and 2023. It worked. In 2024 low inflation was restored and we reduced interest rates.

We’re entering 2025 in good shape. Lower interest rates are beginning to boost consumer spending and housing activity, and we expect further strengthening as these lower rates work their way through the economy. With inflation back to target and household and business expectations of inflation once again looking normal, trust in the Bank of Canada as measured by our own surveys of Canadians rebounded after taking a hit in 2022-23. In fact, citizens’ opinion of the Bank has risen in almost all the measures we track.

This year also marked an important milestone in the work we do to assess risks to the financial system. We deployed a broader, system-wide surveillance framework, and more detailed analysis of the financial stresses facing households, banks and businesses. We reflected this work in our enhanced spring publication, which has been renamed the Financial Stability Report. Our robust assessment of risks to the financial system will also better inform monetary policy decisions, reflecting the important role the financial system plays in the transmission of monetary policy.

In fact, promoting economic and financial system resilience was a key focus of the Bank’s international work in 2024. Together with partners around the world, we discussed topics such as increasing economic fragmentation, technological innovation, climate change, and cyber security. As Canada assumes the presidency of the G7 in 2025, the Bank will continue to lead difficult discussions on shared global issues.

Back at home, the Bank also reached an important milestone in our new mandate to supervise Payment Service Providers (PSPs). On November 1^st we began receiving applications from PSPs to register with the Bank. Leading up to this, staff worked tirelessly to ready our operational capacity, build industry awareness, and develop our supervisory framework. Next year we will begin our official supervision and enforcement duties.

One cannot think of payments without considering the Bank’s role in providing Canadians with secure bank notes. In 2024, we ramped up our work on a new $20 bill, which will be vertical in design. It will continue to feature the Vimy Memorial and will introduce a portrait of His Majesty King Charles III. And in December 2024, the Government of Canada announced that Terry Fox will be featured on a new $5 note. These redesigned notes will feature next-generation security features so that Canadians can trust the safety of bank notes. 

Building trust and awareness was a common theme across all the key functions of the Bank. The effectiveness of our work depends on people understanding our actions and trusting that we are making decisions in their best interests. To this end, we’ve ramped up our social media presence and engagement, and we’re making bold efforts to publish content across a variety of channels that will help Canadians better understand what we do, and why.

In 2024, we expanded our outreach and consultation program. This included regular visits by Governing Council members to meet with people in communities across the country, listening and learning about their economic realities. The Bank of Canada Museum staff ramped up its efforts to build economic literacy, including the launch of a new “You Are the Economy” resource for teachers.

Accountability and transparency are vital to trust. In 2024 we began holding press conferences after every interest rate announcement to explain our decisions, and we published a Summary of Deliberations that lays out the issues Governing Council considered. We redesigned our Monetary Policy Report as a fully digital document to make more data behind our forecasts easier to access. And we undertook a comprehensive review of the extraordinary actions we took to unfreeze financial markets and support the economy during the COVID‑19 pandemic. This review was published early in 2025, alongside an independent external assessment. Both are important stepping stones in continuous improvement, a commitment to learning and building future resilience.

As I said at the outset, none of this could have been achieved without our talented and dedicated employees. Let me take this opportunity to celebrate and thank our employees across Canada who are central to our success.

In 2024 the Bank was named one of Canada’s Top 100 Employers for the 15^th consecutive year. We continued to foster greater equity, diversity and inclusion in our work, which has made us a stronger institution. A particularly important accomplishment this year was the release of the Bank’s first Reconciliation Action Plan, which aims to both deepen our understanding of Indigenous economies in Canada and build an equitable and inclusive organizational culture here at the Bank.

This year we also announced a new Strategic Plan for the 2025-2027, which will see me through to the end of my term as Governor in June 2027. We have some big things to accomplish. By the end of 2026, we will renew our monetary policy framework. Our framework has served Canadians very well through thick and thin, and I am committed to ensuring we have the best framework for the future. We will also be launching the new $20 note in early 2027. Our bank notes are our most tangible product—they must be convenient and secure.

To better organize the Bank for success in executing our strategic plan and mandate, we realigned our management and governance structure in 2024. This included updating the structure of our Executive Council and launching a process to appoint a second external Deputy Governor in 2025. And we continued to strengthen our operational infrastructure, build cyber resilience, and reduce our carbon footprint.

As 2024 closes, inflation is back to target, and we are committed to maintaining price stability. At the same time, we are looking ahead and preparing for new challenges. Threats of additional tariffs on exports to the United States are a major source of uncertainty, and we need to be ready.

Whatever the future may bring, we will continue to provide rigorous, evidence-based analysis on the economy. We will take monetary policy decisions guided by our inflation-targeting framework and independent of the political process. We will foster a stable financial system and support secure payments. These are our contributions to the economic and financial well-being of Canada and all its peoples.

I salute everyone at the Bank of Canada for delivering. And I thank Canadians for their trust. We strive to earn it every day.

Tiff Macklem
Governor