Like many other major central banks, we have embraced the notion that monetary policy is more effective when people can  BIS Review 40/2003  1  understand what their central bank is doing and why. That is the motivation behind our semi-annual Monetary Policy Reports and Updates, our eight interest rate announcements every year, and our many public appearances and speeches.
Of course, monetary policy does not function in isolation. It works best when it is complemented by fiscal policies aimed at avoiding deficits and lightening government debt burdens. Reducing, and ultimately eliminating, the federal deficit in the 1990s helped Canada’s international credibility, lowered the risk premium demanded by investors, and gave Canada more flexibility to adjust to changing economic circumstances.