C.D. HOWE commentary - Tell-tale Signals: A Customized Toolkit for

The methodology involved in its construction growth in house prices after the Bank dropped the (along with the methodologies behind the other overnight rate to 0.25 percent at the beginning of indicators) is summarized in the online Appendix the pandemic. [...] of crucial importance in leading the Council to The diffusion index dipped below 50 in the declare that the downturn in the first two quarters months of June and July of 2023, indicating a of 2015 was not a recession,10 as the index remained majority of industries were declining. [...] The second rule we include is Leading Economic Activity the inertial rule, which includes the lagged policy Index rate so that interest rate adjustments are spread over The setting of the overnight rate and the domestic 15 The effective lower bound-adjusted (or ELB-adjusted) approach accounts for the inability of the central bank to provide more stimulus to the economy when its policy rate cannot. [...] We leave out comparing the index is no publicly available leading economic activity to the COVID pandemic given the propagation of index here in Canada.16 Such an index would tell the virus happened independently of any of the data policymakers/regulators where the economy is in the indicator. [...] In the case of the pandemic recession, its onset was brought On balance, these data lean more heavily towards about by the forced closure of many firms and explaining the macroeconomy than financial stability entire sectors of the economies, so the leading and the individual health of bank balance sheets.