For the Record: Assessing the Monetary Policy Stance of the Bank of Canada

Steven Ambler and Jeremy Kronick
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Steven Ambler: Université du Québec à Montréal
Jeremy Kronick: C.D. Howe Institute

C.D. Howe Institute Commentary, 2021, issue 588

Abstract: The Bank of Canada built an impressive track record with its policy moves pre-COVID, then the pandemic knocked its plans off track. In the Institute’s first annual review of the Bank’s monetary policy performance, authors Steve Ambler and Jeremy M. Kronick look at whether the stance of monetary policy was appropriate for hitting the Bank of Canada’s inflation target during 2018 and 2019, and examine how to determine in real time whether monetary policy is too loose or too tight. Canada’s headline inflation in 2018 averaged 2.3 percent and in 2019 it was 1.95 percent – almost indistinguishable from the target. With the most massive expansion of its balance sheet outside of wartime, the Bank now faces challenges hitting its 2 percent target.

Keywords: Monetary Policy; Central Banking; Cyclical Policies; Economic Outlook; Financial Stability; Inflation and Inflation Control; Interest Rates; Money Supply (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2021
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