Bank of Canada

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Monetary Policy Report

Frequently Asked Questions: Monetary policy

Monetary Policy


Monetary policy is concerned with how much money circulates in the economy and what that money is worth. By keeping inflation low, stable and predictable, the Bank contributes to solid economic performance and rising living standards for Canadians... more.

The framework

Canada's monetary policy is built on a framework consisting of two key components:
  1. Flexible exchange rate
  2. Inflation-control target


Low and stable inflation is the best contribution that monetary policy can make to a productive, well-functioning economy.

Key interest rate

Changes in the key interest rate influence other interest rates, and so affect people's spending decisions.

Monetary policy statistics

Key statistical data pertaining to monetary policy

Monetary Policy Report and Update

Quarterly summaries of the Bank's policies and strategies, and of the economic climate and its implications for inflation

The decision-making process

A detailed explanation of how the Bank arrives at a monetary policy decision

How Monetary Policy Works

A graphical description of the monetary policy transmission mechanism

Why Monetary Policy Matters: A Canadian Perspective   NEW

Explains why the Bank's monetary policy matters to Canada's economy

Large Value Transfer System (LVTS)

The LVTS is an electronic wire system that lets financial institutions and their customers send large payments securely in real time