paul jenkins : communicating canadian monetary policy : towards greater transparency remarks by mr paul jenkins, deputy governor of the bank of canada, to the ottawa economics association, ottawa, ontario, 22 may 2001. * * * i want, first, to thank the ottawa economics association for your invitation to speak to you today. i welcome this opportunity to talk about an important aspect of the work of the bank of canada in conducting monetary policy – communications. in the next few minutes i would like to discuss some of the factors that are central to monetary policy communications. i will touch on a few of the particular challenges we at the bank of canada face. and i ’ ll conclude with a few words on the bank ’ s communications approach, including its role in the new system of fixed dates for announcing interest rate decisions. the trend to openness and transparency let me begin with a brief backward glance. it is not so long ago that central banks did little to let people know what they were up to and why. indeed, in the conduct of monetary policy, little emphasis was placed on trying to explain the objectives of policy because those objectives were not clearly defined. without clear objectives for monetary policy, central bank actions were generally not predictable. and the conventional way of thinking among central banks was that it was best to say nothing and let actions speak for themselves. it is a different story today. indeed, there has been nothing less than a sea change in the way central banks view the role of communications in monetary policy. what we have seen in recent years is a broad and continuing trend among central banks towards greater openness and transparency in the conduct of monetary policy. this trend has come about not because of any “ fad ” for public relations or for marketing a central bank ’ s image. it has occurred because of fundamental changes in the way monetary policy is approached and conducted and the corresponding recognition that the effectiveness of monetary policy is improved through greater transparency. and to be transparent requires proactive and well - planned communication. why communications has become so important for monetary policy for the bank of canada, communications has become a strategic priority in supporting our goal of preserving a low and stable inflation environment. we believe that maintaining low, stable, and predictable inflation is the best contribution monetary policy can make to a productive, well - functioning economy. an important step towards increased transparency, and thus towards clear and focused communication, was taken in 1991 when canada adopted explicit inflation - control targets. the announcement of the targets clarified the objective of monetary policy

in machinery, equipment, and technology. we may now be starting to see the payoff of these efforts, in the form of some larger productivity gains, which i hope will grow and continue, thereby providing the basis for improved standards of living for canadians in the future. all in all, the prospects for our economy are very positive. if these prospects are realized, we will also see a stronger canadian dollar over the medium term.