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The Bank of Canada has been examining the issue of how the Canadian economy adjusts movements in the exchange rate for a long time. Canada's economy is very open, so we always need to understand how exchange rate movements are affecting real economic activity and, in turn, what the implications are for monetary policy.

This is an account of the deliberations of the Bank of Canada’s Governing Council leading to the monetary policy decision on September 4, 2024.

The current international monetary system is in need of reform. This article first provides an assessment of the existing system, highlighting both its strengths and weaknesses. It notes that the system has not facilitated the symmetric and timely adjustment in the real exchange rate necessary to accommodate the integration of China and other emerging-market economies into the global economy. This lack of adjustment contributed to the global financial crisis and recession and, because it is forestalling the required rotation of global demand, is hindering the global recovery. The article then discusses reform of the system that would see all systemically important countries and currency areas adopt market-based and convertible floating exchange rates supported by appropriate monetary, fiscal and financial sector policy frameworks. It also examines the roles of the G-20 countries and major international financial institutions in promoting and facilitating the system’s transition.

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

This is an account of the deliberations of the Bank of Canada’s Governing Council leading to the monetary policy decision on June 5, 2024.

Governor Tiff Macklem reflects on the lessons learned from the pandemic and its aftermath and outlines how the Bank is preparing for the challenges of the future.

The global economy has been unfolding largely as expected, and prospects for continued robust growth are quite favourable, especially over the near term.

Why do I think that such an order is so important? Well, in part it's because history has helped to demonstrate its virtues. But it's also extremely important to bear in mind the context, that is, the world in which we live today. This is a world in which adjustment is perpetual, where change is driven by the development of new technologies, where sectors and nations continually attempt to secure some new advantage. And in this world, price signals from markets help us to understand what adjustments are needed.

The Bank expects a sharp rebound in economic activity in the reopening phase of the recovery, followed by a more prolonged recuperation phase.