Bank of Canada Senior Deputy Governor Carolyn Wilkins says while the central bank's inflation targeting regime has worked well, the central bank is open to alternatives and wants to communicate in a way that avoid unproductive volatility
Amid criticism that the bank surprised markets with its rate hike last week, Wilkins said that she and her cohorts will consider ways to improve communication about how the bank makes policy decisions, but said adjusting rates only when the market expects it would lead to bad outcomes.
The central bank's monetary policy framework, which includes a 2% inflation target, has come under increased scrutiny in recent months as the bank twice raised rates even though inflation remains well below the target.
Wilkins said that while inflation is in the lower part of the bank's target range, part of that is owing to temporary factors and the bank has a forward focus.
She also said that while the bank's economic models have not been perfect, they have been "helpful enough to keep us in the ballpark" of understanding where the economy is.
The bank struck back on Monday against criticism it had not adequately prepared markets for last week's rate increase after a prominent economist took issue with the bank's lack of communication in the nearly two months leading up to the hike.
While some analysts had assumed the bank would wait until October to raise rates because policymakers will have a news conference then to explain the decision, Wilkins said eight meetings a year gives the bank the timing it needs to react to economic changes and "in that sense every meeting is live."
