##eration phase, with weak demand. if, as we expect, supply is restored more quickly than demand, this could lead to a large gap between the two, putting a lot of downward pressure on inflation. our main concern is to avoid a persistent drop in inflation by helping canadians get back to work. policy tools let me now turn to our monetary policy tools. in normal times, we deliver or withdraw stimulus as needed by adjusting our target for the overnight interest rate. that one - day interbank interest rate generally doesn ’ t affect consumers directly, except those with variable - rate mortgages. but changes in the overnight rate affect borrowing costs further out on the yield curve, which is where most consumers and businesses borrow. at the onset of the pandemic, we could see that there would be a huge hit to confidence. so, back in march, the bank rapidly lowered our policy interest rate to 0. 25 percent. this action was not really expected to boost spending in the early days of the pandemic. its immediate purpose was to help support confidence and provide some interest rate relief. but as more retail businesses reopen, low interest rates will help support spending. the policy rate is now at its effective lower bound. some central banks have taken their policy rates below zero. we feel that bringing that rate into negative territory could lead to distortions in the behaviour of financial institutions. however, the bank has a number of other tools we can use to help stimulate demand. the bank has launched a series of purchase programs that involve buying different types of assets. we have launched programs to buy canada mortgage bonds, commercial paper, bankers ’ acceptances, corporate bonds, and provincial and federal government debt. we introduced these programs to make sure that key markets would function properly, and that credit would continue to flow. credit is the lifeblood of market - based economies. during a crisis, it is imperative that central banks maintain access to credit in order to avoid a credit crunch. when markets aren ’ t functioning properly, the ability of monetary policy to provide stimulus also breaks down. but financial markets are now working considerably better. with this improvement, our asset - purchase programs are becoming a source of monetary stimulus. the bank has committed to buying at least $ 5 billion of canadian government bonds a week until the recovery is well underway. as these large - scale asset purchases build up, they are delivering stimulus through a process that is often called quantitative easing, or qe. here ’ s how it works

track record of success with inflation targeting, which reinforces its effectiveness. as i said, the inflation target is really a beacon to guide our policy. by grounding our actions in our framework, we will always be working toward bringing the economy near capacity with full employment. policy and the pandemic a successful inflation - targeting monetary policy framework has a number of core ingredients. clearly, we need to agree on a measure of inflation to target. we need to assess how much demand is in the economy relative to its productive capacity or supply. we need tools to influence demand, or spending, and bring it in line with supply. we also need an outlook for the economy because it takes time for our tools to affect spending and inflation. and because there are many unknowns, we need an understanding of the risks to the outlook. 1 / 4 bis central bankers'speeches these are the basic ingredients of inflation targeting. and covid 19, combined with structurally low interest rates globally, is affecting all of them. a measure of inflation let ’ s start with our measure of inflation. our target is the 12 - month rate of change in statistics canada ’ s consumer price index ( cpi ) — the most common and comprehensive inflation measure out there. we target the 2 percent midpoint of a 1 to 3 percent range for the annual inflation rate. but in any given month, the cpi can be quite volatile and not reflect its long - term trend. that ’ s because prices of items such as fresh fruit and vegetables or gasoline can jump around a lot, affecting the cpi. so, we look at several specific measures of core inflation to get a better sense of the underlying trend in inflation. total cpi is weighted to reflect the buying patterns of the average canadian household. in normal times, for example, canadians spend a lot more on gasoline than on alcohol, so gasoline has a larger weight in the index. but these aren ’ t normal times. because of the pandemic, canadians are spending much less on gasoline and air travel, and more on food purchased from stores. and until very recently, they weren ’ t spending anything on haircuts. the implication is that the cpi isn ’ t fully reflecting people ’ s current inflationary experience. bank staff have been working with statistics canada to better understand the implications of these shifts in spending patterns. as the economy reopens, many of these shifts will unwind. we will be working to look through temporary shifts while capturing any more enduring changes.