The Bank of Canada should start publishing an interest rate forecast as part of a suggested revamp of its communications with the public regarding inflation , says the C.D. Howe Institute.

“One thing we suggest, which the bank does not do, and I think they’ve been reluctant to do, is that how they’re getting inflation back to target, how they think they will be able to do that, depends on what they think their own policy rate is going to be doing within this six-to-eight-quarter timeframe,” Steve Ambler, a fellow-in-residence at the Canadian think tank, said.

C.D. Howe made the recommendation on rates in a report by Ambler, chief executive Jeremy Kronick and Thorsten Koeppl, another fellow-in-residence, that mostly focused on their belief that the Bank of Canada’s use of core inflation when communicating with the public can be confusing and doesn’t reflect people’s experience.

“Their analytical complexity brings up concerns that people will find the measures out of touch with their inflation experience,” they said in the report, which was released in mid-June.

Core inflation in May held around the Bank of Canada’s two per cent target, but the overall consumer price index (CPI) rose to 3.2 per cent due to a 33 per cent increase in gas prices from a year ago and a 4.3 per cent increase in prices for food purchased from grocery stores, a real thorn in people’s pocketbooks.

To keep Canadians more in the loop, they said policymakers should focus their communications on headline CPI inflation and its projected path over the next eight quarters along with a forecast for interest rates that will move inflation in the forecasted direction.

However, they said there are a few concerns about publishing an interest rate outlook, including that it could be interpreted as “an unconditional commitment to following the predicted interest rate path,” while also jeopardizing the central bank’s credibility if it deviates from the outlook.

“The solution to all these problems is clearer communication,” the authors said.

“It should be clear that it’s (the rate forecast) a projection, it’s subject to uncertainty,” Ambler said.

Such rate outlooks aren’t foreign to central banks. For example, the Swedish Riksbank and the Norges Bank of Norway publish them.

On Thursday, the Bank of Canada published a report that echoed some of C.D. Howe’s observations that core inflation was hard for people to understand.

The 54-page report covered talks with 30 stakeholders, including academic researchers, think tanks, business groups, unions and private-sector economists. But the 198 Canadians across 11 cities who were also talked to said they are concerned about the cost of living and many indicated CPI did not align with their experiences.

They said the headline inflation figure was low and questioned what was included in the basket of goods and services that Statistics Canada uses to calculate it.

C.D. Howe isn’t the only one who has ideas for how the Bank of Canada could do things differently. National Bank of Canada , in a report earlier this month, said policymakers should add the unemployment rate to its list of projections in the quarterly Monetary Policy Report.

The Bank of Canada’s priority is price stability, keeping inflation as close to its two per cent target as possible. But its current framework, which is up for renewal this year, also said that “monetary policy should continue to support maximum sustainable employment.”

There is a relationship between inflation and employment, so National Bank economists Warren Lovely, Stefane Marion and Matthieu Arseneau said it would be “helpful” to know what policymakers are thinking on the jobs front.

Many central banks, including the Reserve Bank of New Zealand, European Central Bank and Bank of England, provide unemployment forecasts.

“It’s past time for the Bank of Canada to permanently incorporate the unemployment rate as part of the baseline economic forecast,” the economists said.

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