Bank of Canada Appoints Experts to Review Pandemic Policies
Ottawa — The Bank of Canada has announced the appointment of three independent experts who will conduct a thorough internal review of the central bank’s policy responses during the COVID-19 pandemic. This initiative, part of a broader effort to learn from the unprecedented challenges of the period, aims to sharpen the Bank’s ability to respond to future crises and ensure the best possible policy outcomes for Canadians. The review’s findings will be publicly available toward the end of the year.
The appointed experts bring a diverse range of experience and perspectives to the undertaking. Pablo Hernandez de Cos, formerly the Governor of the Bank of Spain, will contribute his international perspective and experience navigating global economic uncertainties. Kristin J. Forbes, a former member of the Bank of England’s monetary policy committee, will offer insights into domestic and international monetary policy frameworks. Trevor Tombe, an economics professor at the University of Calgary, will bring a rigorous academic approach to analyzing the Bank’s actions and their impact. The selection of these individuals underscores the Bank’s commitment to transparency and accountability.
Governor Tiff Macklem emphasized the critical importance of this review, stating that it is “critically important” for the Bank of Canada to learn from the experience of the pandemic and its immediate aftermath. He highlighted the necessity of drawing the appropriate lessons to “sharpen (its) response to the next crisis.” Macklem further explained that the diverse perspectives of these experts will “help us draw the right lessons from this unprecedented crisis,” adding that "this is critical to ensuring the bank delivers the best policy for Canadians, whatever lies ahead.” Deputy Governor Sharon Kozicki announced in June that the Bank of Canada would undertake this comprehensive review, aiming to lay out clear lessons learned from the bank’s actions.
The Bank of Canada’s response to the pandemic, beginning in March 2020, saw swift action. In response to the economic shutdown caused by the COVID-19 pandemic, the central bank cut its key interest rate to near-zero and signaled that rates would stay exceptionally low for a long time. Notably, it also launched its first quantitative easing program, a measure involving the purchase of government bonds intended to push interest rates even lower. Two years after the onset of the pandemic, the Bank of Canada began raising interest rates in March 2022 to combat rising inflation, followed by the initiation of quantitative tightening the subsequent month.
The central bank’s policy actions have garnered both praise and criticism from economists and politicians. Many economists credit the Bank of Canada’s swift response in March 2020 with preventing a deeper recession in the Canadian economy. However, others have raised concerns about the quantitative easing program, suggesting it fuelled inflation. Conservative Leader Pierre Poilievre has been particularly vocal in his criticism, accusing the Bank of Canada of effectively bankrolling the federal government’s spending by purchasing bonds, thereby contributing to inflationary pressures. Poilievre has vowed that as prime minister, he would fire Governor Macklem over the Bank of Canada’s actions.
The internal review and the external assessment, which will be conducted concurrently, are expected to be published at the end of the year. The culmination of this work is intended to provide a comprehensive and objective analysis of the Bank of Canada’s actions during a period of extraordinary economic and social disruption, aiming to inform future policy decisions and ultimately, to benefit the Canadian economy.
