Bank of Canada gets dual mandate

Summary#

This bill changes the Bank of Canada Act to define the Bank’s mandate, set clear monetary policy goals, and create a Monetary Policy Committee that votes on interest rates. It adds new transparency rules, regular assessments, and a formal 5‑year agreement with the federal government on the policy framework. It replaces the old ministerial “directive” power with detailed accountability and reporting tools (Clause 6).

• Creates a nine‑member Monetary Policy Committee, including six external members, to set the Bank’s key interest rate by vote (new s.13.1–13.2).
• Sets dual objectives for monetary policy: medium‑term price stability and full employment (new s.14(2)).
• Requires public minutes, vote results, and members’ written reasons after rate decisions (new s.14(5)).
• Requires an annual cost‑benefit analysis of interest‑rate scenarios and a 3‑year review of monetary policy impacts, including on regions and groups (new s.14(4), s.14.1).
• Mandates quarterly meetings between Finance Canada’s Deputy Minister and the Committee, and a 5‑year Bank–Government agreement with policy targets (new s.14.2, s.14.4).
• Removes the Minister’s power to issue a binding monetary policy directive by replacing section 14 with the new “Monetary Policy” provisions (Clause 6).

What it means for you#

• Households and consumers

  • Interest rate decisions will be made by a voting committee and explained with published minutes, votes, and written reasons. This may make mortgage and loan changes easier to follow (new s.14(5)).
  • The Bank must analyze costs and benefits of different interest‑rate paths each year, which can clarify trade‑offs that affect household budgets and prices (new s.14(4)).

• Workers and job seekers

  • Monetary policy will target both price stability and full employment (maximum sustainable employment). This may influence how the Bank balances inflation and jobs over time (new s.14(1)–(2)).

• Borrowers and savers

  • The “policy rate” (the Bank’s key interest rate) will continue to be published. Now, the vote and reasoning behind changes will also be public, helping borrowers and savers plan (new s.14(3), s.14(5)).
  • The Committee must meet at least eight times a year on pre‑announced dates to set the rate, matching a regular decision cycle (new s.13.2(2)).

• Businesses

  • More detail on the Bank’s decisions and scenarios may help with planning for financing, prices, and hiring (new s.14(4)–(5)).
  • The Bank will report every three years on how monetary policy affects prices, employment, growth, investment, productivity, and financial impacts on businesses (new s.14.1(2)).

• Local, provincial, and territorial governments

  • The Bank’s triennial assessment must cover financial impacts on governments and the redistributive effects across regions, which may inform budgeting and debt planning (new s.14.1(2)(c)).
  • The Bank must publish summaries of quarterly coordination meetings with Finance Canada, indicating how fiscal and monetary policies interact (new s.14.2).

• Transparency and accountability for all Canadians

  • A 5‑year public agreement between the Government and the Bank will set the policy framework, targets, and assessment methods, making the Bank’s goals and tools clearer (new s.14.4).
  • Parliament will receive a summary of the 3‑year effectiveness reviews within 30 days, and the Act itself must be reviewed by Parliament every 5 years (new s.14.1(3); Clause 9).

Note: External members of the Monetary Policy Committee are selected through a joint, open process by the Governor, the Deputy Minister of Finance, and an agreed third person; the section states it does not itself entitle members to pay or benefits (new s.13.1(6), s.13.1(9)).

Expenses#

Estimated net cost: Data unavailable.

• The bill contains no direct appropriations, taxes, or fees (Bill text).
• The section creating the Monetary Policy Committee states it does not itself entitle any person to remuneration or benefits for Committee duties (new s.13.1(9)).
• The Bank must add new publications and assessments (minutes, votes, annual cost‑benefit analysis, triennial review, quarterly summaries), which imply administrative costs for the Bank. Data unavailable.
• No official fiscal note identified. Data unavailable.

Proponents' View#

• Clarifies mandate and objectives by adding price stability and full employment, closing the gap between practice and the current Act (new s.14(2); Preamble).
• Improves transparency and accountability through published minutes, individual votes, and written reasons, plus an annual cost‑benefit analysis and triennial effectiveness review tabled in Parliament (new s.14(4)–(5), s.14.1(3)).
• Aligns with international transparency standards referenced in the bill’s preamble (IMF transparency code) (Preamble).
• Adds diverse expertise and independent judgment via six external voting members chosen through an open process, reducing groupthink risk (new s.13.1(2), s.13.1(5)–(6)).
• Strengthens coordination with fiscal policy while preserving Bank independence; the Deputy Minister of Finance attends as a non‑voting observer, and quarterly meetings are disclosed (new s.13.1(4), s.14.2).
• Replaces the ministerial directive power with clear targets, a 5‑year public agreement, and regular reviews, which supporters say provides accountability without ad hoc political direction (Clause 6; new s.14.4).

Opponents' View#

• Dual objectives (price stability and full employment) could complicate decisions and weaken the focus on inflation, raising the risk of higher or more variable inflation over time (new s.14(2)).
• Publishing individual votes and reasons may politicize decisions, encourage public lobbying of members, and increase market volatility around announcements (new s.14(5)).
• The selection process and the Deputy Minister’s observer role may increase perceived political influence over monetary policy, affecting the Bank’s independence and credibility (new s.13.1(4), s.13.1(6)).
• Removing the Minister’s directive power could reduce democratic accountability in rare emergencies when elected officials might want to direct policy (Clause 6).
• External members are not entitled to remuneration under this section, which could limit who can serve and raise equity and conflict‑of‑interest concerns if members hold other jobs (new s.13.1(9)).
• New analyses and reporting (annual cost‑benefit, triennial review, quarterly summaries) add operational burden and may distract from core policy work; cost and staffing needs are unspecified (new s.14(4), s.14.1, s.14.2).