Description
Read the remarks given by Tiff Macklem, Governor of the Bank of Canada, on June 22: “Monetary
policy in the context of COVID-19” (Bank of Canada, June 22, 2020). You can find it on Avenue to
Learn.
2. Answer the following questions in writing.
a. Mr. Macklem describes several ways in which COVID-19 has affected the economy and has
made it more complicated for the Bank of Canada (BoC) to implement their inflation
targeting monetary policy framework. Summarize the different complications that the BoC is
facing.
b. Mr. Macklem also talks about the different ways that the BoC adjusted their policies in
response to COVID-19. One major goal of the BoC was to make sure “that credit would
continue to flow”. Describe the different policy tools that the BoC used to maintain access
to credit.
c. One of the first steps that the BoC took to combat the crisis was to lower their policy
interest rate to the lowest possible level, 0.25 percent, to boost consumer confidence and
economic activity. Using our model of Chapter 9 (“Central Banking and the Money Supply”),
argue how a lowering of the interest rate charged on Central Bank lending helps to boost
economic activity.

Explanation & Answer

Attached. Please let me know if you have any questions or need revisions.
1
Monetary Policy During COVID-19
Student’s Name
Institutional Affiliation
Course ID and Name
Tutor’s Name
Due Date
MONETARY POLICY IN THE CONTEXT OF COVID- 19
2
Monetary Policy During COVID-19
Complications the Bank of Canada Is Facing in Implementing an InflationTargeting Monetary Policy Framework.
The consumer price index of the Canadian people is not currently reflecting on the
inflationary experience. Canadians do not use the same amount of gasoline, air and other items
as the standard times that the pandemic is not there. This means that the spending shifts of
individuals are not regular. Thereby, the Bank of Canada cannot comprehensively use spending
shifts to measure the economy's inflation rate (Macklem, 2020). Additionally, the essential and
firm containment procedures at the beginning of the pandemic period forced the closure of some
jobs that cannot continue remotely. This, in...
