What is the Bank of Canada's primary role?

The Bank of Canada is the country's central bank and is responsible for monetary policy, the issue of Canadian bank notes, the management of federal government debt, and the oversight of the financial system's stability. It was established by the Bank of Canada Act of July 3, 1934 and began operations on March 11, 1935 under its first Governor, Graham Towers. The Bank's headquarters is the Bank of Canada Building at 234 Wellington Street in Ottawa.

The Bank conducts monetary policy primarily through its target for the overnight rate, the interest rate at which major financial institutions borrow and lend one-day funds among themselves. The current Governor of the Bank, Tiff Macklem, took office on June 3, 2020 and reports to the Bank's Governing Council. The Bank publishes a Monetary Policy Report four times a year and announces interest rate decisions on eight fixed dates each year.

The federal government and the Bank renew an inflation control target every five years. Since 1991 the target has been 2 per cent inflation as measured by the Consumer Price Index, with a control range of 1 to 3 per cent. The current agreement runs through 2026 and adds a goal of supporting maximum sustainable employment alongside the inflation target. The Bank raised its policy rate rapidly from 0.25 per cent in March 2022 to 5 per cent in July 2023 to combat post-pandemic inflation, then began cutting rates in June 2024 as inflation returned toward target.

The Bank also issues Canadian polymer bank notes, manages the federal government's accounts and debt issuance, and supervises systemically important payments and clearing systems through Payments Canada and the Canadian Payments Association. The Bank does not regulate individual chartered banks or insurers, which fall under the Office of the Superintendent of Financial Institutions, but works with OSFI on financial stability through the Heads of Agencies Committee.