Bank of Canada Monetary Policy

On the contrary to the policies of the United States, material about(predicate) Canadas financial policy was easily accessible on the Bank of Canada website, straight-forward and easy to understand. Its clear that their target audience is the average Canadian citizen. They didnt yield the run-around so- to- speak, of what their main objectives are, and much of it was watered down so that anyone could comprehend it.The Bank focuses on keeping puffiness low, stable and predictable in order to get ahead long-term investments for citizens to contribute to lasting scotch growth, the creation of jobs and increased productivity which will ultimately improve standard of living. This strategy is encompassed by the inflation reassure target that was adopted by the Bank of Canada in 1991, which sets a control range of 1-3 percent, ideally with a 2 percent midpoint.And, looking at historical statistics since its inception, the Bank has been able to maintain this control effectively. For example, inflation rate for 1Q 2013 was 1. 3%. According to the Bank, this financial policy is implemented by influencing short-term interest order which is done by raising or lowering the target for the everywherenight rate. In the end, a reduction in the policy rate, or easing of monetary policy, can be expected to boost total ask for Canadian goods and services, and vice versa.In addition to this, a nonher goal for the Bank is maintaining flexible metamorphose rates which they consider best suited for achieving their inflation target. The floating Canadian dollar provides an exchange rate buffer which allows the rescue to absorb and adjust to economic shocks it may encounter. Though additional factors like exchange rates and unemployment seem to be important to policy makers, they are not focused on as intently as inflation and little information is available in regard to them.Their thinking is that monetary policy cannot have a systematic and sustained effect on any new (prenominal) variable, thus making it senseless to adopt any other long-term targets. It seems apparent that the Canadian policy strives to stay put forward looking in a sense. The Bank places much of its emphasis on long-lasting shocks to the economy, rather than those believed to be short lived. By attempting to keep inflation close to their target, they consider themselves better able to respond to changes in the economic environment in such a way to avoid situations of excess demand or upply. Thus, pressures of inflation rising or falling are kept to a minimum. Theres much argument surrounding whether or not Canadas policy is really that good or if they have just been lucky over the years. Volatility has increased in the Canadian economy over the years, however, they believe that their exceptional economic performance was the result of an even greater improvement in monetary policy and the policy offset the volatile environment, resulting in greater macroeconomic performance.It s especially important to the Bank to remain credible to the Canadian people by being open and clear about their policy choices. They feel that this credibility keeps expectations to preserve future inflation close to the target and this anchors them to ensure that it happens. Even though Canadas approach to communicating its monetary policy is much different than that of the United States, one could argue that they may be putting blinders on their citizens, to avoid poor performance in other areas.Is their layman, tunnel vision approach regarding inflation control diverting the public from questioning whether or not it the best framework to utilize to drive the economy in a positive direction? The Canadian economy is still struggling to recover from the Great Recession and is trying to find ways in order to avoid the zero lower bound issue, but they put little importance communicating on how they are going to do so with the public.