The Bank of Canada published a review of the exceptional monetary policy actions it took during the COVID-19 pandemic, finding they provided important support to the economy and setting out lessons intended to inform responses to future crises. An independent evaluation commissioned by the Bank and conducted by former Bank of Spain Governor Pablo Hernández de Cos, MIT Sloan Professor Kristin Forbes and University of Calgary Professor Trevor Tombe was released alongside the review. In response, the Bank’s Governing Council agreed that any future large-scale asset purchase program should be communicated clearly in terms of its purpose and designed with a clear exit strategy. If the Bank uses extraordinary forward guidance on the future path of interest rates, it should also continually and clearly communicate the conditions under which the guidance would end. Governing Council reaffirmed that the bar for using these exceptional monetary policy tools should remain very high.
Bank of Canada 2025-01-17
Bank of Canada publishes review of pandemic-era exceptional measures and tightens communication expectations for future asset purchases and forward guidance
The Bank of Canada reviewed its COVID-19 pandemic monetary policy actions, highlighting their economic support and lessons for future crises. An independent evaluation by experts was released alongside the review. The Bank's Governing Council emphasized clear communication and exit strategies for future large-scale asset purchases and extraordinary forward guidance, maintaining a high threshold for using such tools.