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Monetary Policy

Decision-making process

Deliberation and decision

On the Friday before the fixed action date, the Governing Council begins its own deliberations in earnest. The Council operates on a consensus basis. This means that as differing views and interpretations are presented, the process of debate and discussion moves towards a shared view that all Governing Council members can support.

Achieving consensus
The Council begins by developing a common view on the most likely future path for the economy and the underlying trend in inflation. They then reach agreement on the main risks around this outlook and the overall balance of risks. Finally, they begin their deliberations on the appropriate path for the key policy rate and the related communications activities.

Final decision
The Council reconvenes the following Monday, and by the end of the day reaches a consensus decision on the setting of the rate. With support from a senior communications staff member, they prepare the press release that outlines the reasons behind the decision. Early Tuesday morning, the decision is confirmed. At 9 a.m., the key policy rate is announced. A media lockup at the Bank allows reporters to prepare their stories in advance for prompt release when the rate is announced.

Follow-up communications
Four times a year, two days after a fixed announcement date, the Bank releases either the Monetary Policy Report or the Monetary Policy Report Update. These provide details on the Governing Council's outlook for economic activity and inflation, the key risks around this outlook and the reasons for the recent rate decision. The release of the Report or Update is accompanied by background briefings to the media by the deputy governors and a press conference by the Governor and Senior Deputy Governor.

The Report is also followed by testimony before parliamentary committees and by presentations by deputy governors and other senior staff across the country and in international financial centres.