Fixing Canada’s CPI: A Simple and Sensible Policy Change for Minister Flaherty
Core, What is it Good For? Why the Bank of Canada Should Focus on Headline Inflation
The Bank of Canada should place less emphasis on the “core” Consumer Price Index (CPI) in explaining its policy choices, according to a report released today by the C.D. Howe Institute. In, “Core, What is it Good For? Why the Bank of Canada Should Focus on Headline Inflation,” authors Philippe Bergevin and Colin Busby say […] When Nightmares Become Real: Modelling Linkages Between The Financial Sector And The Real Economy In The Aftermath Of The Financial Crisis
Our understanding of the links between the financial sector and the rest of the economy needs to improve, concludes a report from the C.D. Howe Institute. In When Nightmares Become Real: Modelling Linkages between the Financial Sector and the Real Economy in the Aftermath of the Financial Crisis, authors Philippe Bergevin, Pierre Duguay and Paul Jenkins […]Natural Hazards: Some Pitfalls on the Path to a Neutral Interest Rate
While the Bank of Canada expects the Canadian economy to return to full employment by the middle of 2012, its critics have stressed the need to raise interest rates to a “neutral” value by then to keep inflation stable. But defining this neutral level, normally associated with full employment, is a bit of a smoke […]Overnight Moves: The Bank of Canada Should Start to Raise Interest Rates Now
The time is right for the Bank of Canada to start raising interest rates, according to a report from the C.D. Howe Institute. In “Overnight Moves: The Bank of Canada Should Start to Raise Interest Rates Now,” leading monetary economist Michael Parkin warns that delayed action poses risks and the prospect of “ugly policy choices” […]Raise Rates Now: Financial Post Op-Ed
Published in the Financial Post on May 26, 2011
By Michael Parkin
The Bank of Canada has announced five “no change” decisions since it raised the overnight rate target to 1% last September. The consensus is that the bank will announce its sixth “no change” next week and possibly more through the summer. I hope that the consensus is wrong and that the bank delivers a surprise 25-basis-point rate increase next week. Further, I hope that the bank announces this decision with words that engender the expectation of similar increases on every decision day until April 2012 and possibly beyond.
Points of general agreement The bank sees a Canadian economy with substantial slack and well-anchored inflation expectations. It…
Lower Canada’s Inflation Targets: Financial Post Op-Eds
Feb. 17 and 18, 2011 — Cutting the inflation target to 1 percent and measuring it more accurately would have lasting economic benefits that should outweigh short-term political objections, argues a two-part Financial Post op-ed based on a study by the C.D. Howe Institute. McGill University economist Christopher Ragan, who holds the Institute’s David Dodge Chair in Monetary Policy, proposes a coherent five-part policy package for a renewed monetary policy agreement, due in 2011, between the Bank of Canada and the federal government.
To read part one of the op-ed, click here.
To read part two of the op-ed, click here.
Precision Targeting: The Economics – and Politics – of Improving Canada’s Inflation-Targeting Framework
Cutting the inflation target to 1 percent and measuring it more accurately would have lasting economic benefits that should outweigh short-term political objections, according to a study released today by the C.D. Howe Institute. In Precision Targeting: The Economics – and Politics – of Improving Canada’s Inflation-Targeting Framework, McGill University economist Christopher Ragan proposes a […]Time for a 1% Inflation Target: Financial Post Op-Ed
Published in the Financial Post on January 27, 2011
By Angelo Melino
Inflation made the news this week when Canada’s December consumer price index numbers showed a year-over-year increase of 2.4%, well above the Bank of Canada’s 2.0% target. A longer-term debate has been brewing, however, as the inflation targeting regime approaches its 20th anniversary. The current monetary policy agreement between the Bank of Canada and the Department of Finance, which sets 2% as the target for annual growth in consumer prices, is set to expire at the end of 2011. What comes next?
After the last renewal of the agreement in 2006, the bank announced that it would consider lowering the inflation target, or switching from…
Moving Monetary Policy Forward: Why Small Steps – and a Lower Inflation Target – Make Sense for the Bank of Canada
The Bank of Canada should lower its inflation target as part of a new monetary policy agreement due at the end of 2011, according to a study released today by the C.D. Howe Institute. In Moving Monetary Policy Forward: Why Small Steps – and a Lower Inflation target – Make Sense for the Bank of […]Watch the Money: Financial Post Op-Ed
Published in the Financial Post on November 2, 2010
By Philippe Bergevin and David Laidler
The financial crisis did not begin in Canada and our monetary policy regime coped with it well. But recent events have reminded us that stable inflation does not guarantee financial stability, and have made it imperative that the 2011 monetary policy agreement between the Bank of Canada and the Minister of Finance should be explicit about the bank’s responsibilities in this area.
Even so, monetary policy should not be overloaded with competing tasks: Maintaining low and stable inflation must remain the bank’s overriding goal after 2011.
Fortunately, the successful pursuit of price stability incidentally promotes…