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October 8, 2020

Tricky Juggling Act Ahead for Bank of Canada

  • The Bank of Canada must handle three challenges simultaneously—providing economic stimulus, hitting inflation targets and managing its massively expanded balance sheet—all while dealing with associated credit and political risks.
  • Authors Steve Ambler and Jeremy M. Kronick explore the challenges the Bank of Canada faces as it goes beyond conventional monetary policy with large-scale asset purchases, and provide guidance on how to address them.
  • It's imperative that governments clearly lay out a plan for bringing back fiscal anchors that were set aside during the pandemic, with a clear plan for achieving the optimal level for these anchors, conclude Ambler and Kronick. It is also imperative for the Bank of Canada to re-commit, alongside the federal government, to hitting the 2 percent target as part of the 2021 inflation-control renewal.
Steve Ambler
Steve Ambler

Professor Steve Ambler taught at l’École des sciences de la gestion de l’Université du Québec à Montréal (ESG UQAM) from 1985-2020, and chaired the Department from 2012-2015.

Jeremy Kronick
Jeremy Kronick

Jeremy is Associate Director, Research at the C.D. Howe Institute, where he is in charge of the financial services and monetary policy research programs.  He has written on a range of topics including the link between demographics and monetary policy, how blockchain technology will impact the economy, and the importance of the financial services sector in trade negotiations.