Bank / Credit Union

Pandemic to test Bank of Canada’s inflation expectations

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August 26, 2020

The economic fallout from the COVID-19 pandemic will determine Canadians' faith in the Bank of Canada's ability to keep to a 2% inflation target, according to a WHTC report.

"While we have benefited from having well-anchored inflation expectations in the past, this mooring will be tested by the very rough economic waters caused by the pandemic," Lawrence Schembri, deputy governor told the news outlet.

According to Schembri, public confidence in the inflation target means the bank's decision to cut rates three times during the pandemic has had an impact. The 2% inflation rate target is jointly reviewed every five years by the central bank and the government of Canada. The current target will expire in December 2021, according to the report.

The bank launched an online survey asking Canadians to provide feedback on its inflation targeting framework. This was the first time in the history of the bank that it has ever sought public input about the target.