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This monthly newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website.

In the April Monetary Policy Report, the Bank noted that inflation was well above its 2 per cent target and that short-term inflation expectations had edged up.

The Canadian economy continues to adjust to major global developments.

As part of its provision of liquidity in support of the efficient functioning of financial markets, the Bank of Canada announced today that it will enter into a 28-day term purchase and resale agreement (PRA) as follows:

This issue focuses on the upcoming renewal of Canada’s inflation-control target. Bank researchers discuss the estimate of the lower bound to policy interest rates in Canada. They also discuss downward nominal wage rigidity and whether its presence warrants considering a higher inflation target. The third article highlights the experience some international central banks have had with unconventional monetary policies. The final article describes monetary policy frameworks in 10 advanced economies.

The three articles in this issue provide an overview of the monetary policy decision-making process at the Bank of Canada, a discussion of Bank research on the assessment of vulnerabilities in the financial system and a description of recent fragmentation in Canadian equity markets.

The Bank of Canada is contributing to the collective effort to support the Canadian economy and financial system, and to ensure credit channels remain open.

Since the July Monetary Policy Report Update, and against a backdrop of robust global economic expansion and strong commodity prices, the Canadian economy has been stronger than projected. It is now operating further above its production potential than had been previously expected.

This article summarizes the proceedings of a conference hosted by the Bank of Canada in November 1999. Three major themes emerged at the conference. The first concerned uncertainty about the transmission mechanism by which monetary policy affects output and inflation. The second concerned the potential usefulness of monetary aggregates in guiding the economy along a stable non-inflationary growth path. The third was the recent developments in dynamic monetary general-equilibrium models. The work presented suggests that a wide range of models is useful for understanding the various paths by which monetary policy actions might influence the economy.

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