The Bank of Canada governor Poloz, in speech, “A Teachable Moment From The Pandemic”, has said “asset purchases have so far roughly tripled the size of our balance sheet, which began the episode at C$120 billion.
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The events of the past few weeks clearly fit the definition of a “teachable moment” in my field, which is central banking. It is very worthwhile to think about them now when things are still fresh—indeed, so fresh that the episode is still in motion.
I will set the scene very briefly. When I returned to the Bank of Canada as Governor in 2013, the economy was operating short of its full capacity and inflation was well below target—a legacy of the 2007–09 global financial crisis. I remember giving my first speech as Governor in June 2013. I predicted that the economy would gradually make its way “home,” which lies at the intersection of 2 percent inflation and full employment. We arrived in 2014, but then oil prices collapsed, forcing a detour. For much of 2018–19 though, the economy was operating near its full capacity with inflation very close to target.
And then came COVID-19.
Full text, here.
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