Navigating uncharted territory

The pandemic challenged our thinking

Economics textbooks don’t offer a model for getting out of a global pandemic and dealing with the effects of multiple shutdowns. In the face of this uncertainty, the Bank responded aggressively to prevent the worst of all possible outcomes—a severe contraction of the economy and a downward spiral of deflation. We paired our bold intervention with a clear exit strategy so that Canadians could understand how the Bank would respond to future developments.

Today, GDP and employment levels are higher than they were before the pandemic. In fact, businesses are struggling to find skilled workers to fill jobs. And inflation is uncomfortably high, largely because of global supply chain disruptions that happened at the same time as a seismic shift in consumer demand from services to goods.

*[GDP]: gross domestic product