Extraordinary Forward Guidance in Canada During the Pandemic

Christopher S. Sutherland

No 2026-1, Staff Analytical Papers from Bank of Canada

Abstract: We consider two trade-offs inherent to extraordinary forward guidance (EFG): potency versus flexibility, and the credibility of forward guidance versus the credibility of inflation targeting. We argue that the form of EFG used by the Bank of Canada during the COVID‑19 pandemic balanced both trade-offs relatively well. We also draw three lessons from the Bank’s pandemic EFG experience.

Keywords: Monetary policy; Monetary policy tools and implementation (search for similar items in EconPapers)
JEL-codes: D83 D84 E37 E52 E58 (search for similar items in EconPapers)
Date: 2026-02
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsap:26-1

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