of the pandemic. try to remember just how little we knew about the virus and how it would affect our lives and the economy. in those early days, there was simply too much uncertainty for our standard analysis, and that is exactly what we told canadians. we didn ’ t provide a basecase projection in the april and july 2020 monetary policy reports. instead, in april, we outlined various scenarios of how the crisis might play out. and in july, we used a central scenario to help explain our assumptions about the pandemic and the economy. in both cases, we were clear about what we didn ’ t know and about the range of possibilities we were considering. we were also transparent about the actions we were taking. for example, we released a summary of deliberations for the unscheduled rate decision on march 13, 2020, and we provided weekly balance sheet updates after rolling out largescale asset purchases to restore market functioning. - 9as the pandemic progressed, we began to reflect on the effectiveness of our policy decisions and other actions. we shared those findings with the public. in the july 2022 monetary policy report, when inflation was near its peak, we detailed the main factors behind our prior inflation forecasting errors. 9 i want to highlight two key points about this. first, we did this work at a time when prices were still climbing sharply — in essence, we were reviewing our actions in real time. second, we didn ’ t wait until the crisis was over to share our findings with the public. we put them out as quickly as we could. we did this because we wanted to be transparent with and accountable to canadians. in december 2022, governor tiff macklem spoke in detail about the lessons learned from the bank ’ s experience with unexpectedly high inflation. he also touched on how those lessons would shape our decision - making process going forward. 10 in march 2023, deputy governor toni gravelle gave a speech assessing the bank ’ s market interventions during the pandemic. 11 his remarks drew from a detailed review by staff of the emergency programs and facilities the bank used to restore market functioning at the onset of the pandemic. 12 over the course of 2023, my colleagues and i continued to speak frankly about what we were seeing in the data and our takeaways. in his year - end speech, the governor updated canadians on how we were applying pandemic lessons to our work. and he detailed how the

would maintain the policy interest rate at 0. 25 per cent from april 2009 to mid - 2010, conditional on the outlook for inflation. this exceptional guidance provided additional monetary policy stimulus through greater certainty about the policy path and by influencing rates at longer maturities. 5 the federal reserve used a similar device two weeks ago with the statement that interest rates are likely to remain at current levels through mid - 2013. but the expectations channel can also seriously handicap policy if not managed properly. as research and experience have shown, policy makers cannot manipulate the economy by creating false expectations without damaging their credibility. and with impaired credibility, a central bank ’ s influence on the economy is seriously diminished. 6 keynes ( 1936 ). for instance, the dow jones index dropped by 5. 5 per cent and 4. 6 per cent on 8 and 10 august, respectively, followed by pick - ups of 4. 0 per cent and 3. 9 per cent on 9 and 11 august. woodford ( 2003 ) emphasized the importance of “ managing ” the public ’ s expectations through systematic monetary policy. boivin, kiley and mishkin ( 2010 ) showed that changes in the behaviour of monetary policy in developed countries have anchored inflation expectations better and significantly changed the transmission of shocks to economic activity and inflation. bank of canada, monetary policy report, april 2009. the annex to this report describes the bank of canada ’ s approach to and the principles surrounding the conduct of monetary policy when the overnight interest rate is at the effective lower bound. evidence suggests that the bank of canada ’ s forward - guidance lowered canadian interest rates out the yield curve relative to what their historical relationship with inflation and unemployment rates would imply. see he ( 2010 ). kydland and prescott ( 1977 ) ; and barro and gordon ( 1983 ). for more recent contributions, see clarida, gali and, gertler ( 1999 ) ; and athey, atkeson and kehoe ( 2005 ). for a discussion of challenges involved in trying to build credibility in the early days of inflation targeting in canada see clinton and zelmer ( 1997 ). bis central bankers ’ speeches this reciprocal dynamic between expectations and monetary policy is one of the most important insights of economic research of the past forty years. the successful achievement of monetary policy objectives helps to establish credibility and anchor inflation expectations. this credibility, in turn, gives the central bank greater scope and flexibility to stabilize the economy more effectively while keeping inflation expectations in line with monetary policy objectives.