Dealing with extreme uncertainty

Risk management and COVID-19

The COVID-19 pandemic brings a whole new set of risks and uncertainties.

How the labour market, business investment, and household, government and corporate debt evolve will depend on how long it takes to defeat the virus. And that’s the greatest uncertainty of all.

In the face of this uncertainty, our priorities are helping people and the economy and sticking with our inflation target. We do this by laying the foundation for a strong recovery:

  • We have cut interest rates to as low as they could go.
  • We have taken steps to support the financial system, so households and businesses can access credit and governments can secure funding for key relief programs.

Some worry that our measures will cause inflation down the road. However, the bigger risk is deflation, or falling prices, which is our immediate concern.

The extreme uncertainty from COVID-19 adds urgency to research that we and other central banks are doing to update and refine our risk management approach.

News – Bank of Canada

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