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Governor Poloz explains that monetary policy is a powerful tool to promote economic welfare, but it also has some important limits.

Governor Tiff Macklem discusses key issues involved in the Governing Council’s deliberations about the monetary policy decision.

This paper studies the effects of foreign exchange (FX) interventions in a two-region model where governments issue both short- and long-term bonds. We find that the term premium channel dominates the trade balance channel in our calibrated model. As a result, the conventional beggar-thy-neighbor effects of interventions are overturned.

Results from the Business Outlook Survey for the third quarter of 2023, along with those from the July, August and September 2023 Business Leaders’ Pulse surveys suggest that on balance, firms are still planning to make larger and more frequent price increases than they did before the COVID-19 pandemic. Further, businesses' outlook for demand has continued to weaken as higher interest rates impact the economy.

Deputy Governor Lawrence Schembri discusses the importance of potential output to monetary policy, as well as policy challenges and opportunities in a world of low potential output growth.

Economists in the nineteenth century spent considerable time discussing the merits of a free-banking system, in which each commercial bank would be able to issue its own notes and deposits, subject to a convertibility requirement backed by its own gold reserves. Such a system, the proponents argued, would be able to deliver price-level stability yet be flexible enough to withstand the vicissitudes of the business cycle. Moreover, there would be no need for central banks. While this idea has received less attention in recent years, some economists still put it forward as a practical alternative to the current system. Laidler suggests that the centralizing tendencies in banking would inevitably undermine competition within a free-banking system, and lead to the natural emergence of one dominant bank. Other developments in the twentieth century, most notably the demise of the gold standard and widespread agreement that governments should play a determining role in setting monetary policy goals, have also limited the practicality of such a system. Laidler examines the Bank of Canada's history from the free-banking perspective and concludes that the current system of inflation targeting provides a much better anchor for orderly price-level behaviour than the free-banking system's convertibility could ever guarantee.

Over the years, both Canada and France have had to make decisions about the framework guiding monetary policy. The authorities in the two countries have made choices that reflect the differences in our economies.

The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 3 1/4 per cent.

The Bank of Canada raised its Bank Rate today by ¼ of one percentage point to 5½ per cent. The operating band for the overnight rate was correspondingly increased, and the Bank’s target for the overnight rate is now 5¼ per cent.

There is a great physical distance between our two countries - in terms of latitude, there are about 80 degrees of separation between Buenos Aires and Ottawa. But despite that distance, Canada and Argentina are closer, and have more in common, than you might think. We are both federations, with a certain natural tension between the national government and relatively powerful provinces.