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Bank of Canada Receives Renewed Mandate
Global News Morning Toronto – December 14, 2021
Source video can be found [HERE]
Bank of Canada receives renewed mandate
The federal government has announced changes to the Bank of Canada’s mandate. Global News Business correspondent Anne Gaviola offers her insight on what the changes could mean for interest rates, inflation, and housing.
While we’ve included the summary bullet points below, the full details of the renwed mandate can be found at the following link https://www.bankofcanada.ca/2021/12/joint-statement-of-the-government-of-canada-and-the-bank-of-canada-on-the-renewal-of-the-monetary-policy-framework/
“…the Government of Canada and the Bank of Canada agree to renew the inflation target on the following basis:
- The target will continue to be defined in terms of the 12-month rate of change in the total CPI.
- The inflation target will continue to be the 2 percent mid-point of the 1 to 3 percent inflation-control range.
- The agreement will run for another five-year period, ending December 31, 2026.
The Government and the Bank further note that:
- Given that there is uncertainty about the maximum level of employment that is consistent with price stability, the Bank will continue to use the flexibility of the 1 to 3 percent control range to actively seek the maximum sustainable level of employment when conditions warrant.
- The Bank will consider a broad range of labour market indicators and will systematically report to Canadians on how labour market outcomes have factored into its monetary policy decisions.
- The Bank will also continue to leverage the flexibility of the 1 to 3 percent range to help address the challenges of structurally low interest rates by using a broad set of tools, including sometimes holding its policy interest rate at a low level for longer than usual.
- The Bank will utilize the flexibility of the 1 to 3 percent range only to an extent that is consistent with keeping medium-term inflation expectations well anchored at 2 percent.
- The Bank will explain when it is using the flexibility in the framework.”