ABSTRACT
Central bank policy is also often evaluated based on observed growth rates of money and credit, so policymakers need to be prepared to respond to the commentaries. Work on the credit channel of monetary policy is receiving increasing attention in the literature. Many of policymakers economies have experienced credit crunches in the past during which financial institutions became quite unwilling to make loans to certain sectors of the economy. The Bank of Canada recently adopted a new process based on eight fixed announcement dates each year for decisions on changes in key policy instrument, the target for the overnight rate. The purpose is to help people assess risks to the base case projection. Projections and information are gleaned from monetary, credit, and financial variables. The communication strategy of the Bank of Canada is designed to be open and transparent so as further to reduce the uncertainty faced by the public.
