The Neutral Rate in Canada: 2018 Estimates

Xin Chen and José Dorich

No 2018-22, Staff Analytical Notes from Bank of Canada

Abstract: The neutral nominal policy rate serves as a benchmark for assessing the degree of monetary stimulus and provides a medium- to long-run anchor for the policy rate. Since quantitative measures of the neutral rate are subject to considerable uncertainty, Bank staff rely on four different approaches to estimate the Canadian neutral rate. These approaches take explicit account of domestic and global factors, the relative importance of which varies with each approach. Informed by this analysis, Bank staff estimate that the Canadian neutral nominal policy rate lies between 2.5 and 3.5 per cent, the same range reported in the April 2017 Monetary Policy Report.

Keywords: Economic models; Interest rates; Monetary Policy (search for similar items in EconPapers)
JEL-codes: E40 E43 E50 E52 E58 F41 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2018
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsan:18-22

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