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Monetary policy decisions are reached through consensus by the members of the Bank's Governing Council.

Monetary Policy

Decision-making process

The following is an abridged and updated version of an article entitled Information and Analysis for Monetary Policy: Coming to a Decision, by Tiff Macklem.

In late 2000, the Bank of Canada adopted a system of eight pre-set dates per year on which it announces its key policy rate. This system is often referred to as the Bank's fixed announcement dates, or simply fixed dates.

The following sections describe the information and analysis presented to the Bank's Governing Council in the two or three weeks leading up to a fixed announcement date.

This process includes an economic projection based on a model of the Canadian economy; an analysis of the information from monetary and credit aggregates, interest rate credit spreads, and changes in credit access; and information on the interest rate expectations of participants in financial markets.

The steps involved in reaching a decision on the setting of the policy rate are also explained.

Next: Staff economic projection