BoC to publish detailed summaries on policy deliberations after IMF recommendation

OTTAWA – The Bank of Canada will begin publishing detailed summaries of its monetary policy considerations next year, following a recommendation from the International Monetary Fund (IMF).

The move comes after the IMF released a report on Wednesday reviewing the central bank’s transparency practices.

The summaries will provide the public with more transparency about what the bank is doing and provide insight into the decision-making process, said Benjamin Reitzes, managing director of Canadian Rates and macro strategist at BMO Capital Markets.

“[It’s] definitely an interesting and welcome addition to the Bank of Canada,” he said.

The report said the Bank of Canada “sets a high standard for transparency” but still made 10 recommendations for improvement, including publishing a detailed summary of the Governing Council’s monetary policy decisions.

“The (Bank of Canada) monetary policy framework is comprehensive, transparent and understandable, although there is room for more transparency in relation to policy considerations,” the report said.

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In response to the report, the Bank of Canada committed to publishing summaries about two weeks after each monetary policy decision, beginning in January.

The summaries are not attributed to individual councilors and no votes are recorded as there are no votes in the Bank’s advisory process.

The US Federal Reserve is already releasing minutes that are released three weeks after its meetings. Minutes of the meetings are also published after five years.

But Reitzes said a key difference between the Bank of Canada and the Federal Reserve is that the Bank of Canada’s decision-making process is consensus-driven, unlike the Fed, where 12 members of the Federal Open Market Committee vote on monetary policy decisions.

“Once they’ve made their decision, everyone has the same opinion, so it’s a little bit different,” said Reitzes. “That changes things a bit and maybe makes it a little bit harder to give good color to the conversation they’re having in the governing council.”

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Stephen Williamson, an economics professor at Western University, said that because no transcript is provided, the amount of information the public gets about the decision-making process depends on how the summaries are produced.

“If it’s not word for word, then you have to trust that someone actually gave you the gist of what was discussed,” Williamson said. “But it’s better than the nothing we have at the moment.”

The Bank of Canada also said it has agreed to improve transparency around its risk management and audit functions and increase its public communications efforts.

“We know that through transparency we can help all Canadians understand what we do and why, and that is vital to their confidence,” said Tiff Macklem, Governor of the Bank of Canada.

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The Bank of Canada currently releases a statement when it releases its interest rate decision, but does not provide a record of its deliberations. It also publishes its monetary policy report four times a year, which contains its latest forecast for the economy alongside its interest rate decision.

The IMF report is part of a pilot project to assess transparency practices in central banking around the world.

As part of the review, a team of independent experts met with central bank staff and executives, as well as a range of stakeholders, including academics, think tanks, parliamentarians, market participants and journalists.

Other recommendations included communicating more frequently with the public in “plain language” to promote financial stability.

This report from The Canadian Press was first published on September 28, 2022.

Nojoud Al Mallees, The Canadian Press