Strategic Communication at the Bank of Canada:

Planning for the 2011Renewal of the Inflation Targeting Agreement

Presentation to the XV Reunión de Communicación de Banca Central San José, Costa Rica 12 July 2012

Glen Nichols,

Deputy Chief of Communications

Bank of Canada

Contents

Our strategic approach and core principles in

communications

The opportunities to communicate

Setting the strategy and creating a content

Quantifying results, reaching a broader audience

2

Our strategic communications goals

Ensure that the Bank’s work is understood Public understanding makes monetary policy and financial stability initiatives more effective, and supports currency and funds management operations.

Protect the Bank’s institutional reputation

We help to shape how the Bank is regarded by external audiences and we reinforce the institution’s culture inside the Bank

Provide strategic guidance, design and execute the communications components of all Bank initiatives

3

Our fundamental approach

Be appropriately transparent

Tell everyone at the same time

Focus on target audiences

Stay above the fray

The media are our allies

Uphold institutional credibility

4

Key audiences

The Canadian public

Financial and other media

Financial markets

Parliamentarians and other opinion leaders

Government officials

5

Our approach to the media

Our goals as a Central Bank:

Increase public awareness

Enhance credibility

Win support

Change behaviour

Media goal:

To engage, interest and inform their audience

6

Bank communications and the media

Global economic conditions and market volatility will

continue to make Central Banks a focus of media

attention.

Media are essential to reach broader audiences, while

an understanding of new media will help us reach target

audiences more effectively.

Media coverage is essential to achieving core objectives.

7

Broadening coverage to reach core audiences

We believe monetary policy works best when a central bank’s goals and actions are clear and well understood by the public.

Communication is supported by a well-integrated program of speeches, announcements, press briefings and conferences linked to our Fixed Announcement Dates and Monetary Policy Reports.

We have long standing professional relationships with major media, and other key stakeholders (e.g. Market analysts, commercial bank economists).

Our speeches, media relations and briefings support the communication of Bank decisions to build and reinforce public confidence over the long haul.

The current world environment has greatly increased interest in the Bank’s role in domestic and international financial stability.

8

What is inflation targeting (IT)?

In 1991, the Bank of Canada and the Government of Canada agreed on a target to guide monetary policy and bring inflation down to 2%.

Since 1995 the target has been set at 2% and renewed every five years.

Monetary policy aims to keep inflation low, stable and predictable at the 2% target.

This is the best contribution monetary policy can make to sustained economic growth and employment over the medium term.

IT has provided more economic stability in Canada over the past 20 years, even during the recent global financial crisis.

The 2011 agreement renewal provided an opportunity to raise the Bank’s visibility and educate the public on the effectiveness of IT.

9

Strategic communications opportunity

Since 1991 Consumer Price Index (CPI) inflation has on average been 2 per cent, close to the target.

Real output has expanded at an average rate of 3 per cent.

Labour market performance has been generally healthy.

IT has provided Canadians with a more stable economic environment in which to make sound spending and investment decisions.

The global financial crisis has underscored the value of Canada’s flexible IT in helping Canada weather the recent financial crisis better than most other advanced economies.

10

Key messages

IT has worked – proving its worth in both tranquil and turbulent times.

IT is part of larger set of economic policies, including fiscal prudence, a strong financial system and structural adjustment. Together they work to enhance economic performance and help Canada withstand major shocks.

IT is flexible. The Bank’s sights are always fixed on meeting the target over the medium term; but IT has built-in flexibility to adjust the timeframe, if needed, to return inflation to its target.

Renewal of the IT agreement is an opportunity to refine the framework, based on the Bank’s extensive research between renewals of the agreement. The global financial crisis has also provided important lessons that have informed the Bank’s thinking.

11

Announcement of the 2011 IT Renewal

A joint Government/Bank statement on the Renewal of the Inflation

Control Target.

Release of background paper and news release.

Media background paper.

Speech by the Governor, media briefing, interviews.

Q &A package, with a special focus on the role of monetary policy in

supporting financial stability.

Feature article in the Bank of Canada Review on international

experience with inflation targeting and the evolution of central banks’

thinking on the interaction of monetary policy and financial stability. 12

Announcement of the 2011 IT Renewal

One single “home” on the Bank’s website for all IT-related materials

since 1991.

Revised backgrounders on monetary policy and the inflation -control

target.

Feature article for Bank employees in the internal newsletter Bank

Notes.

Resource materials for teachers.

Animated presentation on the benefits of low inflation.

13

Quantifying success?

Considerable media coverage in all major financial media.

Media analysis shows coverage/content reflected our key messages.

Ongoing coverage in 2012 indicates core audiences/opinion leaders have integrated key Bank messages.

Now completing additional multi-media products targeted to classroom use and for posting on the Bank’s website.

14

Questions?

Thank you, Merci.

Gracias, Obrigado.

15