Monetary policy | The Bank of Canada will publish its discussions

(Montreal) For the sake of transparency and to make its decisions better understood, the Bank of Canada will publish, starting in January, a report on the discussions that lead it to increase or not increase its key rate.



“Giving more information about our monetary policy decisions helps people better understand what we do and why we do it,” central bank deputy governor Sharon Kozicki said in making the announcement. Thursday in Montreal in front of the members of the Urban Development Institute.

The Bank of Canada is thus complying with the recommendations of the International Monetary Fund, which calls for greater transparency on the part of central banks in the conduct of their monetary policy. It also mimics the US Federal Reserve, which already publishes a detailed summary of Federal Open Markets Committee (FOMC) meetings two weeks after announcing its interest rate decisions.

“Our new summary will provide details on the issues discussed during the deliberations, and how the Board of Directors reached consensus,” the Deputy Governor said of the publication, which will be available on the website. of the central bank.

Like all central banks, the Bank of Canada must convince the public of the soundness of its decisions, because its credibility is its most important tool.

Recently, she has used all kinds of means to better explain her mission to the general public, including using social networks.

This transparency is necessary, according to Sharon Kozicki. “At the end of the day, it makes monetary policy more effective,” she said.

Explain the 50 point increase

In her speech in Montreal, Ms.me Kozicki gave an overview of the talks that led the Bank of Canada to raise interest rates for the seventh time in nine months.

The central bank opted for a significant hike of 50 basis points, to 4.25%, rather than 25 points as many economists expected because inflation is starting to show signs of easing.

Bank of Canada officials note that despite economic growth remaining strong, the housing market is contracting and consumption of goods is slowing.

We therefore believe that the monetary policy measures we have taken to rebalance supply and demand are working.

Sharon Kozicki, Deputy Governor of the Bank of Canada

But demand is still too strong, according to the Bank of Canada. “We have all seen how this excess demand manifests itself. By long delivery times, restaurant queues, out-of-stock products or entrepreneurs who are not afraid of losing customers if they raise their prices, “illustrated Mme Kozicki.

Inflation has also slowed, but not enough in the eyes of the central bank. “To get closer to our target, inflation over three months must fall even more, and this fall must be sustainable,” she insisted.

The Bank of Canada has seven weeks of economic data to digest before its next rate decision on January 25. She will assess whether new measures are necessary, “but if the figures are higher than expected, we are ready to act with force,” said Sharon Kozicki.


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