Remarks by Lawrence Schembri
Deputy Governor, Bank of Canada
Canadian Association for Business Economics
August 25, 2020
Delivered via webcast
Perceived inflation and reality:
understanding the difference
"All our knowledge has its origins in our perceptions."
-Leonardo da Vinci
Introduction
Good afternoon. It is a pleasure to once again have this opportunity to speak at
CABE's annual
late-summer conference, although the circumstances have
changed radically since I last spoke a few years ago. The COVID-19 pandemic
has disrupted all our lives and imposed much hardship on many.
When I was last with you, we were on the top floor of a Kingston hotel
overlooking Lake Ontario. I felt tested to hold your attention given the lovely view.
Today, I'm
similarly challenged, but by a virtual platform, made necessary by the
serious health threat posed by the virus.
I'll be
The topic addressing is inflation. It is a subject that central bankers never
tire of talking about, since low and stable inflation is the core objective of the
Bank of Canada's
monetary policy mandate.
I would like to offer a slightly different perspective to engage your interest-
namely, the difference between how people perceive inflation versus the actual
measured rate.
This issue is important because individuals' perceptions of inflation today-and
their expectations of it for the future-influence their spending and saving
behaviour, and thus affect overall macroeconomic outcomes. Moreover, inflation
expectations have significant implications for the credibility of our 2 percent
inflation target and for the effectiveness of monetary policy.
I would like to explore with you the observation that consumers, on average, think
inflation is higher than what is measured and reported by statistical agencies.
- 2 -
This gap has been regularly observed in Canada as well as in other jurisdictions,
such as the United States and the United Kingdom.1
Recent public outreach conducted by the Bank has provided further evidence of
this gap. As part of the process leading up to the renewal of our inflation-control
target agreement with the federal government in 2021, we have sought out and
are listening to the views of the public and other key stakeholders. One of the
messages we have heard is that many people feel that the official consumer
price index (CPI) inflation rate does not reflect the higher inflation they believe
they are facing.
This gap between perception and measurement has been more pronounced
during the pandemic. In the most recent Canadian Survey of Consumer
Expectations (CSCE) conducted this past May, respondents indicated that they
expected inflation to increase in the short term. In fact, the CPI inflation rate
declined sharply over this period and has been below our 1 to 3 percent
inflationcontrol range.2
To examine possible explanations for this gap, the Bank has been conducting
joint research with Statistics Canada. In this speech, I will share with you some of
the preliminary results before we publish our official findings this fall.
And so today, I would like to do three things:
•
first, illustrate and characterize this gap;
•
second, explore some measurement and behavioural explanations of this
disconnect between perception and reality; and
•
third, examine the implications for monetary policy, including
communications to different audiences.
Low and stable inflation promotes economic prosperity
Economists define inflation as a sustained increase in the general price level of
goods and services in an economy over a period of time. While this concept of
inflation seems straightforward, measuring inflation accurately is difficult.
The CPI inflation rate is designed to track how much the average Canadian
household spends and how that changes over time. To this end, Statistics
Canada uses its Survey of Household Spending to estimate the shopping basket
1
See, for example, S. Axelrod, D. Lebow and E. Peneva, "Perceptions and Expectations of Inflation by U.S.
Households," Board of Governors of the Federal Reserve System, Finance and Economics Discussion
Tenreyro,
Series No. 2018-073 (October 2018) and S. "Understanding Inflation: Expectations and Reality"
(speech given at the Ronald Tress Memorial Lecture, Birkbeck University of London, London, England,
July 10, 2019).
2
One explanation for the higher perceived inflation during the pandemic containment period is that
households shifted their spending toward items that experienced higher price increases (e.g., food) and
away from items that saw lower price increases or declining prices (e.g., gasoline). See Bank of Canada,
"Box 2: Adjusted CPI inflation shows only slightly less decline than CPI inflation," Monetary Policy Report
(July 2020): 18. Another explanation is that price increases have an outsized impact on household
perceptions of inflation.
- 3 -
of a representative household. This basket consists of about 700 goods and
services that Canadians typically buy, each with their own weight.3
Measuring CPI inflation is also very important for us at the Bank. We firmly
believe that keeping inflation low, stable and predictable is the best contribution
monetary policy can make to promoting the economic and financial well-being of
Canadians.
Our inflation target of 2 percent is defined in terms of the annual CPI inflation
rate. This widely reported rate holds us to account because our performance can
be easily assessed against it.
The Bank has had a good track record of achieving our target. Inflation has
averaged close to 2 percent since we established this specific target in 1993, and
it has been very stable since.4
But it's more than just
a number. Achieving our target on a continuing basis
contributes to rising standards of living for all Canadians. When people and
businesses feel confident that they know what the rate of inflation will be, they
can make better long-range plans for their careers, their savings and their
investments.
Moreover, when low inflation is well maintained, price signals are more
meaningful. Markets and the overall economy function better. And this leads to
stronger and more stable employment and output growth.
Our success in achieving our 2 percent target, however, depends on many
public's
factors-and one of the most important is the inflation expectations.
Having a policy target that is well understood and trusted by Canadians helps
keep inflation on target.
Inflation perceptions and expectations
Let's turn our attention now to the main issue I would like to address
today: the
discrepancy between the measured rate of inflation and what some individuals
perceive inflation to be.
As I mentioned earlier, the average consumer tends to think they are facing
higher inflation than both measured inflation and our target. We know this
because we began to collect the views of Canadian households about inflation in
2014 through the CSCE I mentioned earlier. This survey asks individuals what
they think the inflation rate is now and what they expect it to be in the future.
Let's
look at some observations from the most recent CSCE which are
(Chart 1),
typical of past surveys.
3
Each item in the basket is given a weight that depends on how much a typical household spends on that
item. The weights in the CPI basket are currently fixed for two years. This approach helps to obtain a
consistent measure of pure price change.
4
Since 1993, the CPI inflation rate has been within our 1 to 3 percent target range about 80 percent of the
time.
- 4 -
First, we see that consumers' perceived inflation rate today is generally above
the actual CPI inflation rate, but reasonably close to our 2 percent target.5
Second, there is a correlation between current perceptions and future
expectations of inflation at both the one- and five-year horizons. For example, if
consumers think prices have notably increased in the last 12 months, then there
is a good chance they will expect inflation to stay high in the future.
Finally, the difference between expected inflation and current inflation (as well as
relative to our target) increases as the horizon is extended from one year to
five years.6
Chart 1: Households perceive inflation to be higher than official measures
%
5
4
3
2
1
0
2014Q4 2015Q4 2016Q4 2017Q4 2018Q4 2019Q4
Bank of Canada inflation-control target Actual CPI
Current perceptions of inflation One-year-ahead inflation expectations
Five-year-ahead inflation expectations
Sources: Statistics Canada and Bank of Canada Last observation: 2020Q2
As an aside, it is noteworthy that a comparison of the CSCE with a similar survey
published by the New York Federal Reserve Bank finds the perception gap is
smaller and less dispersed in Canada than in the United States (Chart 2a and
Chart 2b). This difference may reflect the impact of different communication
strategies by the Bank of Canada and the US Federal Reserve.7
5
It is important to note that this gap is observed, on average, across Canadian households. The gap is
larger for some groups-for example, younger households.
6
The higher expected inflation rate at the five-year horizon might reflect increased uncertainty about inflation
outcomes, as suggested by relatively lower response rates. We also observe a greater degree of dispersion
among respondents at this horizon.
7
Bellemare et al. (2019) conjecture that the narrower gap in Canada might be related to the Bank's success
with and focused communications on the 2 percent inflation target, creating a focal point for perceptions and
expectations at 2 percent. In Bellemare, Kpekou Tossou and Moran, "The Determinants of Consumer's
Inflation Expectations: Evidence from the US and Canada," (unpublished manuscript, Department of
Economics, Université Laval, July 1st, 2020), LaTex.
- 5 -
Chart 2a: Inflation forecast errors are larger in the United States than in Canada
%
5
4
3
2
1
0
-1
2013Q3 2014Q3 2015Q3 2016Q3 2017Q3 2018Q3
Canada one-year-ahead inflation expectations Canada inflation realization, one year later
United States one-year-ahead inflation expectations United States inflation realization, one year later
Sources: Statistics Canada, Federal Reserve Bank of New York Survey of Consumer Expectations, Last observations: inflation expectations, 2019Q2;
US Bureau of Labor Statistics, and Bank of Canada inflation realization, 2020Q2
Chart 2b: Inflation expectations in the United States are more skewed to the upside
Distribution of one-year-ahead inflation expectations, United States versus Canada
%
40
30
20
10
0
Below -3 (-3,0] (0,1] (1,2] (2,3] (3,4] (4,5] (5,6] Above 6
Canada United States
Last observations: Canada, 2020Q2;
Sources: Federal Reserve Bank of New York Survey of Consumer Expectations and Bank of Canada United States, October 2019
Interestingly, Canadian firms and financial market participants expect inflation to
be closer to the 2 percent target (and to actual measured CPI) than Canadian
consumers do (Chart 3). They have a stronger incentive to obtain a more
accurate outlook because they set prices and wages and take positions based on
what they expect inflation to be.
- 6 -
Chart 3: Inflation expectations of firms and professional forecasters have been closer
to target than those of consumers
%
4
3
2
1
2014Q4 2015Q4 2016Q4 2017Q4 2018Q4 2019Q4
Bank of Canada inflation-control target
Firms' two-year-ahead inflation expectations
Professional forecasters' two-year-ahead inflation expectations
Households' two-year-ahead inflation expectations
Note: Firms' expectations are from the Bank of Canada Business Outlook Survey, a quarterly survey that interviews business leaders from
about 100 firms to gather a broad range of economic perspectives. The professional forecasts are from Consensus Economics, which
gathers macroeconomic forecasts that are provided by leading economists.
Sources: Bank of Canada and Consensus Economics
Last observation: 2020Q2
It is also possible that consumers no longer see the benefit of closely monitoring
"rational
inflation. Such behaviour, known as inattention," likely reflects the
economic environment in Canada, where inflation has been low and stable over
the last 25 years.8
All this being said, the gap between Canadians' expectations of inflation-and
this includes those of consumers, firms and market participants-and our inflation
target has been relatively small. These well-anchored expectations have
supported our ability to achieve the 2 percent target.
we don't take for granted
Nonetheless, as a central bank, that inflation
expectations are anchored at the target. The credibility of our target is of
it's
paramount importance. Consequently, valuable to gain insights into why
some households have a perception gap.
Explaining the gap between perceived and measured inflation
Measurement issue 1: representativeness of the CPI consumption basket
One explanation for this gap is that consumers may not feel that the CPI
consumption basket represents the goods and services they consume. In other
words, they may feel that their consumption basket is different from the average.
Or they may think their own purchases have risen in price by more than those in
the CPI basket. In particular, the CSCE found that certain groups of consumers
perceive an inflation rate materially higher than what Statistics Canada reports.
- 7 -
In our joint research with Statistics Canada, we explored this discrepancy by
constructing the consumption basket and inflation rate for different groupings of
households, based on income, education, age and renters versus owners.
Our general finding is that the inflation rates constructed for specific consumer
groupings are similar to the measured CPI inflation rate.9 Simply put, the
perceptions of these groups were not consistent with our results.
take age as an
To illustrate this point, let's example. We constructed different CPI
baskets for young, middle-aged and senior households and calculated inflation
rates for each group (Chart 4).
The results show that, regardless of the different composition of their baskets,
each age group's average inflation rate tracked very
closely to actual, measured
CPI.10
Chart 4: Household-level inflation by age group is very similar
Year-over-year percentage change
%
4
3
2
1
0
2015Q1 2016Q1 2017Q1 2018Q1 2019Q1 2020Q1
Household-level inflation, ages 18-30 Household-level inflation, ages 31-54
Household-level inflation, ages 55+ Household-level inflation, all ages
Source: Statistics Canada
Last observation: 2020Q1
let's go back to
Taking this analysis further, the perceptions reported in the CSCE
for each age group. Chart 5 clearly shows that younger consumers have much
higher and more volatile inflation expectations than the two other age groups,
and certainly higher than the measured rate.
9
While this finding generally holds, low income households and renters have experienced a modestly lower
rate of inflation compared with the average Canadian household over the last five years (on average about
0.2 percentage points). The lower inflation rate for these groups can be explained by the fact that they spend
a larger share of their basket on rent but a smaller portion on child care and housekeeping services, and the
price of rent has been growing by less than that of child care and housekeeping services. This effect has
been offset somewhat by their larger share spent on food, which has experienced higher rates of price
increases. Despite the lower measured inflation rate for these groups, their perceived inflation rates are
somewhat higher than the CPI inflation rate. This difference may reflect behavioural factors.
10
Statistics Canada compiled a Consumer Price Index for Seniors (CPI-S) from January 2013 to
August 2018 and obtained a similar result. For more details, see C. Michaud, "Development of a Consumer
Price Index for Seniors," Statistics Canada Prices Analytical Series (June 20, 2019).
- 8 -
Chart 5: Youth have higher and more volatile perceptions of inflation
%
4
3
2
1
2014Q4 2015Q4 2016Q4 2017Q4 2018Q4 2019Q4
Current perceptions of inflation, ages 18-30 Current perceptions of inflation, ages 31-54
Current perceptions of inflation, ages 55+
Source: Bank of Canada
Last observation: 2020Q2
Measurement issue 2: quality adjustment
issue, let's talk about the
Moving to the second measurement principle of quality
adjustment.
To accurately measure price movements, the CPI should have goods and
services in its basket that are of comparable quality over time. However, we know
from our own experience that the quality of certain products-like electronics and
cars-is constantly improving. Thus, measured price increases should be
adjusted for quality changes.
but they don't
However, in practice, consumers see prices rising consider that the
quality has also improved. They see a larger price tag on things like cell phones,
but they don't
laptops and cars, consider the new features that have been added.
These types of goods represent about one-sixth of the CPI basket, as shown in
Chart 6.
- 9 -
Chart 6: About one-sixth of the CPI basket is subject to regular positive quality adjustments
Gasoline 3%
Gasoline‡
Electricity and others‡
Clothing and others
Electricity and others
31% Food, alcohol, beverages, tobacco
28%
products and others†
Cell phones and others§
Cars and appliances§
Food, alcohol, beverages,
Clothing and others*
tobacco products and
others
Cars and
22%
appliances
11%
Cell phones and others 5%
*Subject to positive or negative quality adjustments (others include furniture and rent)
† Subject to adjustments mostly for changes in size, weight or unit (others include hygienic, medicinal and pharmaceutical products)
‡ No quality adjustments (others include water, fuel oil, public transportation, insurance, books, and many recreational services)
§ Subject to regular positive quality adjustments (others include audio and video equipment and telecom services)
Sources: Statistics Canada and Bank of Canada Last observation: 2020Q2
For these goods, Statistics Canada applies quality adjustment techniques,
including hedonic pricing,11 that take into account price changes resulting from
new features and quality improvements.12 Such adjustments have removed
about 0.2 percentage points from the CPI inflation rate, on average, in recent
years.
Measurement issue 3: the price of housing versus the price of houses
The third and final measurement issue I'd like is that consumers'
you to consider
perception of inflation is likely influenced by the price of houses.13 This is
11
Statistics Canada,
For more details, see "The Canadian Consumer Price Index Reference Paper,"
Catalogue no. 62-553-X (February 27, 2019).
12
Statistics Canada's quality adjustments to the prices of various goods and services are estimates; thus,
there is a risk that the overall impact of quality adjustment may be too small or too large. In the past, the
prevailing view was that measures of inflation were biased upward because of a lack of quality adjustment,
including for the introduction of new goods. Sabourin shows, however, that significant improvements have
greatly reduced this bias in recent years, in P. Sabourin, "Measurement Bias in the Canadian Consumer
Price Index: An Update," Bank of Canada Review (summer 2012): 1-11.
13
There is a significant positive correlation between house price growth, as measured by the Teranet-
respondents'
National Bank House Price Index, and CSCE inflation perceptions and expectations.
we've seen
particularly relevant in recent years, when rapid increases in house
prices in markets like Toronto and Vancouver. This effect is understandable,
since most Canadian households purchase a residence at some point in their
lifetime.
The crucial point is that the CPI inflation basket includes the price of housing-in
other words, the price of the services that a house provides-not the price of a
house. Statistics Canada estimates the price of housing services by adding up
the costs associated with home ownership: namely, mortgage interest, insurance,
property taxes, depreciation and maintenance and repairs.14
Over the last two decades, the price of houses has risen on average more than
twice as fast as the price of housing, at a rate of 6 percent versus 2.5 percent
(Chart 7).
Chart 7: The price of houses has been growing much faster than the price of housing
Year-over-year percentage change
%
15
10
5
0
-5
-10
2001Q1 2004Q1 2007Q1 2010Q1 2013Q1 2016Q1 2019Q1
Price of housing Price of houses
Note: The price of houses is measured using the Teranet-National Bank House Price Index, while the price of housing is based on CPI.
Sources: Teranet-National Bank House Price Index, Statistics Canada and Bank of Canada
Last observation: 2020Q2
is challenging, and it's
The treatment of housing in inflation measurement a topic
of much debate.15 In recent years, Statistics Canada has been working diligently
14
Depreciation refers to the costs to maintain the structure and foundation of a house, while maintenance
and repair costs are associated with the appearance of the house. The price of housing services can be
estimated through either a user-cost approach, which is the one taken by Statistics Canada, or a
rentalequivalence approach, with the latter seeking to capture the value of the services consumed. For further
information on the different approaches to measuring the price of housing, see P. Sabourin and P. Duguay,
"Measuring Durable Goods and Housing Prices in the CPI: An Empirical Assessment," Bank of Canada
Review
(autumn 2015): 24-38.
15
Some jurisdictions exclude the price of housing entirely from their official measure of inflation. Some
observers have gone to other extremes and have argued that the price of houses should be included in the
CPI basket. The latter approach is difficult to justify theoretically, because houses are assets and serve as a
store of wealth. It is the services that the house provides that are consumed.
to improve the measurement of the price of housing services, and further
enhancements are planned.
Behavioural explanations
While these three measurement issues offer plausible explanations of why
consumers' perceptions of inflation may be higher than measured rates, there are
other explanations that are less tangible.
The behaviour of consumers-which is determined by psychology as well as
knowledge-has been found to have a significant impact on inflation perceptions
and expectations.
In terms of behaviour, our recent research shows that consumers' perceived
inflation rate tends to be influenced more by rising prices. The perception gap
narrows when sharply declining prices are excluded
(Chart 8).16
Chart 8: Inflation perceptions are strongly influenced by price increases
%
3
2
1
0
2014Q4 2015Q4 2016Q4 2017Q4 2018Q4 2019Q4
Current perceptions of inflation CPI inflation when sharply declining prices are excluded Actual CPI inflation
Sources: Statistics Canada and Bank of Canada
Last observation: 2020Q2
The reason behind this is simple: in forming their perceptions of inflation,
consumers seem to put more weight on prices that go up rather than down. The
loss of purchasing power from rising prices has been found to have an outsized
psychological impact.17
Studies in other countries have found evidence of another behavioural
explanation: namely, that consumers' inflation perceptions are more strongly
influenced by the prices of goods they purchase frequently-like food and
gasoline.18 However, our recent research does not find a significant positive
relationship between the price movements of frequently purchased goods and
perceived inflation in Canada (Chart 9).19
Chart 9: Inflation perceptions not influenced by frequent purchases
%
4
3
2
1
0
2014Q4 2015Q4 2016Q4 2017Q4 2018Q4 2019Q4
Current perceptions of inflation CPI, frequent purchases CPI, non-frequent purchases
Sources: Statistics Canada and Bank of Canada
Last observation: 2019Q4
Another factor that could affect the inflation perceptions gap of some consumers
is their understanding of inflation and the economic factors that influence it.
Improving their financial literacy could enhance their knowledge and serve to
reduce the observed gaps. Central banks-including the Bank of Canada-are
making a meaningful contribution to strengthening financial literacy through
communication and outreach efforts.20
Y. Gorodnichenko, "Is the Phillips Curve Alive and Well After All? Inflation Expectations and the Missing
American Economic Journal: Macroeconomics
Disinflation," 7, no. 1: 197-232.
18
Chaffe,
For Canada, see A. "Consumer Price Inflation by Frequency of Purchase," Statistics Canada
Analytical Paper Catalogue No. 11-621-M no. 84 (2010); for the United States, see F. D'Acunto,
and M. Weber,
U. Malmendier, J. Ospina "Exposure to Daily Price Changes and Inflation Expectations,"
National Bureau of Economic Research Working Paper No. 26237 (September 2019).
19
The price index of frequently purchased goods is constructed by using goods and services that
consumers generally purchase on a monthly basis or more frequently (e.g., food, alcohol, tobacco products,
utilities and personal care items). Note that the lack of significant correlation of the prices of frequently
purchased goods and perceived inflation is found at the aggregate level.
20
At the federal level in Canada, the Financial Consumer Agency of Canada has primary responsibility for
promoting financial education. Provincial governments have also taken steps in recent years to include
financial literacy in their high school curricula, often in collaboration with the Canadian Foundation for
Economic Education.
So to recap, we've established that consumers'
inflation perceptions are
looked at
generally higher than what is actually measured. We've measurement
And we've also considered
issues that could explain this. some ways that
consumers'
behaviour and understanding can shape the way they perceive
inflation.
The next logical questions would be: What is the role of a central bank in guiding
consumers' expectations
towards our 2 percent inflation target? And why is this
important?
Inflation expectations and the conduct of monetary policy
Let's tackle the last I think it's relevant to look at the
question first. To do so,
existing inflation-control agreement between the Bank and the Government of
Canada. The agreement states that:
"The well-established credibility of this framework has reinforced the Canadian
public's confidence that monetary policy will continue to achieve the inflation
target, and helped underpin the Canadian economy through challenging times."
The key words here are "public's
confidence."
Because inflation expectations are a key determinant of economic behaviour and
the Bank's commitment to
outcomes,21 it is important that consumers understand
its inflation target. The more confidence that Canadians have in this commitment,
the more they will anchor their beliefs and behaviours to this 2 percent target.
Put another way, people will shrug off temporary movements in inflation if they
believe inflation will remain on target in the long run. Their confidence that
inflation will remain close to 2 percent helps keep inflation at that rate by allowing
the economy to stabilize after short-term bumps.
As a result of this confidence, the Bank has the flexibility to see through
keep a "steady hand" on the conduct
temporary movements in inflation. We can
of monetary policy, with the goal of keeping inflation sustainably on target.
However, in the context of a large and persistent shock, such as the start of the
COVID-19 pandemic earlier this year, having a credible inflation target is even
more important. With inflation expectations well anchored, the Bank was able to
effectively respond in March to this unprecedented adverse shock.
One of the actions we took was to reduce our policy interest rates by 150 basis
points over three announcements. Because inflation expectations were well
anchored at 2 percent, this translated into a decline in the real interest rate of
roughly the same amount. This decline supported consumption and investment
spending by households and firms, and helped promote demand through other
channels, including the exchange rate.
In contrast, if inflation expectations had not been well anchored, the reduction in
our policy interest rate would have had less impact. Consequently, more
monetary stimulus would have been necessary.
Now, what about the role of communications in anchoring expectations?
We've established that inflation expectations affect macroeconomic outcomes
and the conduct of monetary policy. Policy success in achieving the target and
informative and accessible communications can, in turn, also influence
expectations.
To be effective in influencing expectations, the Bank should: communicate often,
communicate clearly and communicate consistently-all to a wide variety of
audiences that include consumers, firms and market participants.
The Bank has embedded this concept in our strategic planning. We are
committed to knowing our audiences, their interests and how best to reach them.
Indeed, our research finds that when we provide households with practical
information about our inflation target, they tend to shift their views toward actual
inflation.22
In addition, we use other communication channels, including engaging in public
23
outreach, offering accessible explanatory articles on our website, and
conducting education programs for students at all levels. All these initiatives help
us connect with the public to explain the work we do and to underscore why it is
important to them and to their families.
We will also continue to consult on our inflation-target renewal process. To this
"Let's Talk
end, we just launched an online public consultation called Inflation."
We are inviting Canadians to tell us what they think about inflation, our
inflationtargeting framework and potential alternative monetary policy frameworks.
Conclusion
Let me conclude.
Low and stable inflation is the core objective of our monetary policy. Achieving
our inflation target depends critically on the credibility of the target and the
public's
anchoring of the perceptions and expectations of inflation.
Acknowledging and better understanding any gap between perceived and
measured inflation is, therefore, very important. Public confidence in the target
depends on measuring inflation accurately. Our research with Statistics Canada
as part of our 2021 inflation-target renewal process underscores our interest in
this goal.
Moreover, our communications strategy must strive to explain inflation, our target
and our policy to different audiences in a clear and accessible manner to deepen
their understanding. Our ongoing efforts to reach out and listen to diverse groups
of Canadians are helping to strengthen our communications.
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.
Our extraordinary policy actions have been firmly focused on attaining our
inflation target, by supporting demand and employment throughout this difficult
and protracted economic recovery.
Through our words-and more importantly, through our actions-we remain
steadfast in our commitment to helping restore the Canadian economy and the
economic and financial welfare of all Canadians.