Bank of Canada measures inflation expectations by

Question

Quizplus · Accepted Answer

The Bank of Canada uses both methods - gathering data by means of a survey of private firms (Option A) and comparing two long run bonds with the nominal and the real yields to maturity (Option B) to measure inflation expectations. By combining these two approaches, the Bank is able to better understand the projected rate of inflation and adjust monetary policy accordingly. Looking at past inflation rates in Canada (Option C) may provide some insight, but it is not the primary method used by the Bank to measure inflation expectations.

Bank of Canada Measures Inflation Expectations by