The agreement between Bank of Canada and the Government of Canada states a target of 2% inflation rate
The Governor reflects on the impact of Covid on country's economy and the challenges it has brought making the economic recovery so complex.
Although the employment rate was very low in the first half of 2021, with the ease of restrictions, it's claimed that the rate went back to pre-pandemic level in the second half. However, the major challenge that was faced even after the recovery was the supply issues which led to higher inflation of both producer and consumer goods.
Understanding the Inflation: 2021
The report states that people's response to a lower inflation rate is one of the reasons of near term inflation expectations being picked up. The demand is tend to go up when consumers fear the prices going up even more in future.
However, the long term inflation expectations remain well anchored, so far.
The Monetary Policy Framework- Interest Rates & Inflation Rate.
The Bank of Canada's flexible-targeting framework was renewed for 2022 to 2026. The agreement reaffirms price stability as the Bank's primary objective. The framework’s foundation remains a 2% inflation target within a control range of 1% to 3%.
The Bank therefore held the policy interest rate at the effective lower bound 0.25% and remained committed to keeping it there until economic slack is absorbed so that the 2% inflation target is sustainably achieved.
Looking Forward: 2022
The Bank of England's executive committee has set out its vision for the future of the Bank, which includes a review of relevant Bank policies to ensure they are aligned with diversity and inclusion and new ways of working.
In 2022, the Bank will:
- Implement its new hybrid workplace model and:
- Support staff through their return to onsite work by offering training, technologies and other resources
- Monitor the impact on the Bank’s work environment and culture
- Complete a thorough review of relevant Bank policies to ensure they are aligned with diversity and inclusion and new ways of working
- Continue to provide employees with opportunities to develop key skills for the future
- Begin implementing the 2022–24 diversity and inclusion strategy and move forward on new pay equity regulations
- Continue to work with central bank partners to promote diversity and inclusion, and host the next conference on diversity and inclusion in economics, finance and central banking
- Transition business-critical applications to the Bank’s new secure information technology infrastructure
- Expand the use of data and digital technologies throughout the Bank
Source: Bank of Canada
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