BoC's Macklem: Essential to keep household inflation expectations anchored

"Many central banks are at the lower bound for their policy interest rate," noted Bank of Canada Governor Tiff Macklem in his prepared remarks at the Jackson Hole Symposium. "In this situation, it is more essential than ever that household inflation expectations remain anchored on our target so that real interest rates can be lowered."

Additional takeaways

"Central banks need to spend more effort speaking and listening to the citizens they serve."

"Diversifying engagement will be critical as central banks tackle the impact of economic structural changes caused by the COVID-19 pandemic, including the amplification of digitalization, debt and inequality."

"Central banks are conducting unconventional monetary policies alongside extraordinary fiscal stimulus, which is challenging public perceptions of central banks' operational independence."

"The independence that is vital for central banks and public perceptions of that independence are under threat in many countries."

"2008 sub-prime mortgage crisis contributed to a broader decline in trust of public institutions and experts, and a rise in political populism."

"Democratization of information has not always made us better informed; social media and internet have vastly broadened access to information but bots and trolls can often push misinformation, conspiracy theories."

"The best way for central banks to get messages to the public is for banks to deliver them themselves."

"Bank of Canada has seen a sharp increase in internet traffic to its website since the COVID-19 crisis began."

Market reaction

The USD/CAD pair largely ignored these comments and was last seen trading flat on the day at 1.3140.