The Bank of Canada has released a review detailing its exceptional policy actions during the COVID-19 pandemic. The report underscores how these measures provided significant support to the economy during an unprecedented period.
Bank of Canada Governor Tiff Macklem emphasized the importance of learning from this experience, stating, “The Bank of Canada is a learning institution, and we must take on board the lessons from this unprecedented experience.” He added that the review would enhance accountability and preparedness for future economic crises.
To ensure transparency, the Bank sought an independent assessment from three experts: former Bank of Spain Governor Pablo Hernández de Cos, Professor Kristin Forbes from MIT’s Sloan School of Management, and University of Calgary Professor Trevor Tombe. Their evaluation was published alongside the Bank’s own review.
Hernández de Cos commented on the quality of the review, saying it “gives a detailed, balanced and credible summary of the Bank’s actions and shows a willingness by the Bank to critically evaluate its own policies and improve policy in the future.”
Following both reviews, the Bank’s Governing Council outlined steps for future crisis responses. They agreed to clearly communicate any large-scale asset purchase programs’ purposes and design them with clear exit strategies. Furthermore, if extraordinary forward guidance on interest rates is used again, it should be communicated with clarity regarding conditions for ending such guidance. The council also maintained that using exceptional monetary policy tools should have a high threshold.
