The Bank’s decisions on interest rates are made at eight pre-announced dates throughout the year, and four of them are accompanied by our Monetary Policy Report (MPR). The MPR provides more detail about global economic developments, our projections for inflation, and the major upside and downside risks to that outlook.
The Governing Council and Monetary Policy Review Committee (MPRC) members take these external insights into consideration as they debate whether to raise, maintain or lower the policy rate. Around three weeks before the decision date, MPRC receives a briefing from staff in each of the Bank’s economic departments, including their assessments of the state of the global economy and Canada, commodities prices and inflation.
Governing Council members then discuss the implications of each scenario: the impact on the job market, households and businesses; how much inflation they believe is desirable; and what risks are present in each case. The decision is reached at the end of a long meeting that involves a lot of discussion and debate.
Central banks have a broad mandate to promote price stability and support growth in their economies, so they’re generally keen to avoid overly strong inflation. The ECB, for example, has a particular focus on maintaining consumer price growth below 2%. It’s an important role, and one that the ECB takes seriously. We’ve looked at the decisions of the Bank of England, Federal Reserve and European Central Bank over many years to see how differently these institutions approach their deliberations.
About the Author
