As demand recovers and economic slack is absorbed, inflation will gradually move back up towards our 2 percent target. The Governing Council also discussed the role our extended toolkit is playing to support the economy. Our purchase programs were initially aimed at improving market functioning and unclogging the financial system, allowing the monetary policy transmission mechanism to work.
With that objective largely achieved and the economy reopening, these programs—particularly the large-scale purchases of Government of Canada bonds—are now working through more channels, which we elaborate on in the MPR. The combination of the very low policy rate and asset purchases is providing considerable monetary stimulus.