An internal review of the Bank of Canada's actions during the pandemic suggests improvements in communicating extraordinary measures, particularly how they will be unwound after a crisis. The review also highlights the bank's underestimation of inflation's strength and persistence in 2021 and early 2022.
OTTAWA — Extraordinary measures taken by the Bank of Canada during the pandemic could be communicated more clearly, an internal review has found, including an explanation of how the actions will be wound down after a crisis has passed.
“The Bank of Canada is a learning institution, and we must take on board the lessons from this unprecedented experience,” Macklem said in a news release. In response to the review, the central bank also said it should continually and clearly communicate the conditions under which extraordinary forward guidance on the path for interest rates would be ended if uses it in the future.
The bank did not fully anticipate the speed of the rebound in demand relative to supply, the report said. However, the bank said its analysis indicated that its policy actions did not on their own push inflation significantly about two per cent.
BANK OF CANADA INFLATION COMMUNICATION ECONOMIC CRISIS MONETARY POLICY
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