Targeting inflation during the pandemic

Tools

The third ingredient are the tools we use to keep demand and supply balanced, and inflation on target. Our main tool is the policy interest rate.

When the pandemic hit Canada in March, we lowered the interest rate to 0.25 percent. As businesses reopen, low interest rates will help support spending and borrowing, so demand can return to normal over time.

We also acted to make sure key markets were working well so that our interest rate cuts work as intended and credit continues to flow to businesses and people who need it.

And we are buying at least $ 5 billion of Canadian government bonds a week until the recovery is well underway. Through a process known as quantitative easing, these bond purchases will make borrowing cheaper for households and businesses.

News – Bank of Canada