Monetary policy framework

• Central Bank Digital Currency and Banking: Macroeconomic Benefits of a Cash-Like Design

  Staff Working Paper 2021-63 Jonathan Chiu, Mohammad Davoodalhosseini

  Should a CBDC be more like cash or bank deposits? An interest-bearing, cash-like CBDC not only makes payments more efficient but also increases total demand. This has positive effects on other transactions, inducing more deposit taking and lending and, thus, bank intermediation.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Monetary policy, Monetary policy framework JEL Code(s): E, E5, E50, E58
• December 15, 2021

  Building on success

  Speech summary Tiff Macklem Empire Club of Canada Toronto, Ontario

  Governor Tiff Macklem speaks about the Bank of Canada’s monetary policy framework review and the agreement between the Government of Canada and the Bank to renew the 2 percent inflation target.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Central bank research, Coronavirus disease (COVID-19), Credibility, Expectations, Inflation and prices, Inflation targets, Labour markets, Monetary policy, Monetary policy and uncertainty, Monetary policy communications, Monetary policy framework, Monetary policy implementation, Recent economic and financial developments
• December 15, 2021

  Our monetary policy framework: Continuity, clarity and commitment

  Remarks (delivered virtually) Tiff Macklem Empire Club of Canada Toronto, Ontario

  Governor Tiff Macklem discusses the Bank of Canada’s renewed monetary policy framework. He reviews Canada’s experience with flexible inflation targeting and explains why the Bank and the Government of Canada agreed to renew the 2 percent inflation target.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Central bank research, Coronavirus disease (COVID-19), Credibility, Expectations, Inflation and prices, Inflation targets, Labour markets, Monetary policy, Monetary policy and uncertainty, Monetary policy communications, Monetary policy framework, Monetary policy implementation, Recent economic and financial developments
• December 13, 2021

  Opening statement by Tiff Macklem

  Opening statement Tiff Macklem National Press Theatre Ottawa, Ontario

  Governor Tiff Macklem discusses the renewed monetary policy framework agreed upon by the Government of Canada and the Bank of Canada.

  Content Type(s): Press, Speeches and appearances, Opening statements Topic(s): Inflation targets, Monetary policy communications, Monetary policy framework, Monetary policy implementation

• What to Target? Insights from a Lab Experiment

  Staff Working Paper 2021-53 Isabelle Salle

  In a laboratory experiment, we ask participants to predict inflation using three different policy regimes: inflation targeting—with and without greater communication of the target—average inflation targeting and price level targeting. We use participants’ predictions to compare the level and stability of inflation under each regime.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets, Monetary policy communications, Monetary policy framework JEL Code(s): C, C9, C92, E, E3, E31, E5, E52, E7

• The Bank of Canada’s “Horse Race” of Alternative Monetary Policy Frameworks: Some Interim Results from Model Simulations

  Staff Discussion Paper 2021-13 José Dorich, Rhys R. Mendes, Yang Zhang

  Bank of Canada staff are running a “horse race” of alternative monetary policy frameworks in the lead-up to 2021 renewal of the Bank’s monetary policy framework. This paper summarizes some interim results of model simulations from their research.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Economic models, Inflation targets, Monetary policy, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E2, E27, E3, E4, E5, E52, E58

• Monetary Policy and the Persistent Aggregate Effects of Wealth Redistribution

  Staff Working Paper 2021-38 Martin Kuncl, Alexander Ueberfeldt

  Monetary policy in the presence of nominal debt and labour supply heterogeneity creates a policy trade-off: a short-term economic stimulus leads to persistently reduced output over the medium term. Price-level targeting weakens this trade-off and is better able to stabilize inflation and output than inflation targeting.

  Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy framework, Monetary policy transmission JEL Code(s): E, E2, E21, E5, E50

• Exploring the potential benefits of inflation overshooting

  Staff Analytical Note 2021-16 Robert Amano, Marc-André Gosselin, Kurt See

  After a period with the interest rate at the effective lower bound, temporarily overshooting inflation may offer important economic benefits. This may be especially true for vulnerable segments of the population, such as workers with low attachment to the labour force and the long-term unemployed.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation targets, Labour markets, Monetary policy, Monetary policy framework JEL Code(s): E, E3, E31, E5, E52, J, J2, J20

• (Optimal) Monetary Policy with and without Debt

  Staff Working Paper 2021-5 Boris Chafwehé, Rigas Oikonomou, Romanos Priftis, Lukas Vogel

  How should policy be designed at high debt levels, when fiscal authorities have little room to adjust taxes? Assigning the monetary authority a role in achieving debt sustainability makes it less effective in stabilizing inflation and output.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Fiscal policy, Monetary policy, Monetary policy framework JEL Code(s): C, C1, C11, E, E3, E31, E5, E52, E58, E6, E62

• Chinese Monetary Policy and Text Analytics: Connecting Words and Deeds

  Staff Working Paper 2021-3 Jeannine Bailliu, Xinfen Han, Barbara Sadaba, Mark Kruger

  What are the main drivers behind the monetary policy reaction function of the People’s Bank of China?

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, International topics, Monetary policy communications, Monetary policy framework JEL Code(s): C, C6, C63, E, E5, E52, E58