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The Bank of Canada and Monetary Policy divide

Updated: Sep 4, 2022

The objective

The objective of monetary policy is to preserve the value of money by keeping inflation low, stable, and predictable. This allows Canadians to make spending and investment decisions with more confidence, encourages longer-term investment in Canada's economy, and contributes to sustained job creation and greater productivity. This in turn leads to improvements in our standard of living. When things go too far, our economy goes into a recession. This combined with the global oil supply issues, war, and uncertainty with economies around the world, we could be in for a nasty year or two.

Canada’s monetary policy framework consists of two key components that work together: the inflation-control target and the flexible exchange rate. This framework helps make monetary policy actions readily understandable and enables the Bank to demonstrate its accountability to Canadians. The Bank of Canada has some cool tools for evaluating inflation and the impact it has over time. Cool Tools link

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