The Bank of Canada retools its economic forecasting for a future that does not look like the past
The surge in inflation in recent years has challenged central bankers to a degree not seen since the high inflation of the 1970s and early 1980s. And as with that earlier period, the experience has called into question the models central bankers rely on to understand the economy and figure out how to keep inflation under control. No economic model, no matter how sophisticated, could have predicted a global health emergency, the speed of vaccine development or the outbreak of a major European war. An in-depth look at how the Bank of Canada’s macroeconomic models misfired in the post-COVID period and how the central bank intends to bring in a new core model for forecasting and analysis.
