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As part of the 2021 renewal of the Bank of Canada’s inflation-control agreement with the Government of Canada, Bank staff are currently comparing several monetary policy frameworks. The primary goal of this day-long workshop is to share—and receive comments on—these comparisons.

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

Using simulations of the Bank of Canada’s projection model, we assess inflation risks from greater supply-shock volatility and show that monetary policy faces sharper trade-offs, as stabilizing inflation increasingly comes at the cost of weaker real activity.

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

Although the current inflation-targeting regime has served Canadians well, sound public policy demands the continuous exploration of possible improvements in the monetary policy framework.

The authors examine whether monetary policy should and could do more to lean against financial imbalances (such as those associated with asset-price bubbles or unsustainable credit expansion) as they are building up, or whether its role should be limited to cleaning up the economic consequences as the imbalances unwind.

When the Bank of Canada was first established in 1935, it had two very different models to choose from—the Bank of England and the U.S. Federal Reserve—in terms of the instruments that it might use for implementing monetary policy. Although some aspects of the Bank's early monetary policy practices, including the role of discount facilities and moral suasion, reflect the British example, other important differences shaped a distinctly Canadian approach. Chant describes what he argues are distinctively Canadian innovations: the Bank's favoured means of managing chartered bank liquidity through transfers of government deposits, the adoption of lagged reserve requirements, and the two periods in which it decided to float the Bank Rate. He also describes the series of bold initiatives that were undertaken in the 1990s with regard to simplifying clearing and settlement procedures, reducing reserve requirements, and setting the Bank's target for the overnight rate. Chant suggests that these changes have improved market efficiency, reduced risk and uncertainty, and strengthened the Bank's influence over its short-term operating target.

he Bank of Canada today released the January update to the Monetary Policy Report, which discusses current economic and financial trends in the context of Canada's inflation-control strategy.

The Bank of Canada today released its July Monetary Policy Report Update, which discusses current economic and financial trends in the context of Canada's inflation-control strategy.