As the Bank of Canada tries to reign in red hot inflation, the central bank is engaging in another fight: one against misinformation.
In recent weeks, the central bank has been using social media to engage the public on the economy, explaining how inflation works and what it's doing to bring inflation back to its two per cent target. However, in its most recent Twitter thread, the bank went beyond explaining economics and took direct aim at a common attack levied against its policy decisions during the pandemic.
“The only people who pay attention are insiders and market experts. And that's usually the only people that they have to talk to,” Gordon said. He’s also repeatedly claimed that the central bank printed money to finance federal spending and therefore caused inflation. “There's always been this expression of the bank printing money whenever they engage in these kinds of policies, but it's not actually what happens,” said Jeremy Kronick, the director of Monetary and Financial Services Research at the C.D. Howe Institute.
The Bank of Canada used this policy tool for the first time when the pandemic hit to fight off the risk of deflation. It bought government bonds from financial institutions using settlement balances, or reserves, that it deposited into the accounts of financial institutions and paid interest on. As the bank stated, these reserves are not the same as cash.
While the Bank of Canada’s motivation to speak directly with Canadians and justify its policies is understandable, Gordon says he’s unsure how effective its efforts are given the central bank doesn’t have much experience in this realm.
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