Monetary Policy and the Canadian Economy: Analysis and Report

This report examines the impact of the COVID-19 pandemic on the Canadian economy. It focuses on the role of monetary policy implemented by the Bank of Canada to mitigate the economic downturn. The report highlights the decrease in oil prices, a significant factor in the Canadian economy, and the challenges faced by Alberta and other oil-producing regions. The Bank of Canada's measures, including lowering interest rates and purchasing government securities, are discussed in the context of supporting businesses and households. The report references the Bank of Canada's press releases and relevant economic models to provide a comprehensive analysis of the economic situation and the policy responses implemented. It underscores the efforts to stabilize the economy, ensure access to financial credit, and the overall impact of the pandemic on various sectors, including the energy sector.

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Due to the global pandemic of the Coronavirus, many economies across the globe have been hit

severely. The Canadian economy has contracted, leading to a reduction of almost a million jobs.
The bank of Canada has come up with measures to help stabilize the economy and save
Canadians during this tough economic period. The pandemic has resulted in a decrease in the
prices of commodities in the market. Oil is one product experiencing a reduction in price in
Canada and across the world. The bank of Canada has initiated a decisive policy action to
support employees and small and medium businesses from dissolution during these harsh times.
Market functions have been improved to ensure monetary and fiscal policy have positive effects
on the economy of Canada.
The prevailing market interest rates have been lowered to ensure households and businesses have
access to financial credits and help them in meeting the daily costs. Companies have had reduced
revenues due to the Covid-19 pandemic. The bank will continue to purchase government
securities to increase the money supply in the economy.
The Alberta estimated revenue for 2020/2021 was $50 Billion, but that is now under serious
threat of failure due to the pandemic. The price of oil has been lowered to just $4.71, western
Canadian select, Alberta is struggling, and so are other oil producers across the globe. The covid-
19 pandemic and monetary policy application in the economy has led to a decrease in oil prices
in Canada and the whole world.
References
Duguay, P., & Longworth, D. (1998). Macroeconomic models and policymaking at the bank of
Canada. Economic Modelling, 15(3), 357-375.
The bank of Canada, Press Releases 15th April 2020.