The Financial Post reports in its Thursday edition that the Bank of Canada's communication around its monetary policy decisions is too technical and difficult for the general public to understand, and more emphasis needs to be made on how officials are planning on getting headline inflation back to the 2 per cent target, says a new report.
The Post's Paula Tran writes that the report released on Tuesday by the C.D. Howe Institute recommended the BOC primarily focus on its projected headline inflation path over the policy horizon -- typically the next six to eight quarters -- along with a forecast of interest rates that would create this inflation path.
This would allow policy-makers to clearly explain how future overnight rates can bring inflation down to the 2 per cent target, which would influence people's expectations of medium-term inflation.
Currently, policy-makers rely on core inflation measures to guide their monetary policy decisions and communicate them to the public. The BOC also publishes four Monetary Policy Reports a year that contain headline inflation forecasts and core inflation measures, but little information about overnight rate forecasts that will guide it back to the 2 per cent goal.
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