Monetary Policy, Income Inequality, and Inflation – What’s the Link?

The Bank of Canada should weigh how income inequality affects monetary policy effectiveness as it pursues its 2 percent inflation target, says a new report from the C.D. Howe Institute.

In “Monetary Policy, Income Inequality, and Inflation—What’s the Link?” authors Jeremy Kronick and Francisco Villarreal investigate the link between monetary policy, income inequality and inflation in Canada, and explore why and how inflation plays a role.