Monetary Policy - Op Eds

Published in the National Post on June 24, 2015

By William Robson

William Robson is president and CEO of the C. D. Howe Institute.

Inflation? Meh. To most Canadians, especially young Canadians, it’s an abstract threat, or no threat at all. And that, for those who remember the crazy price increases of the 1970s and ’80s, is an amazing change for the better.

The end of 2015 will mark two full decades since the Bank of Canada adopted a two per cent target for annual increases in the consumer price index (CPI). And it’s been mostly hitting the target. Over the 234 months from the end of 1995 to this May, the CPI was within one percentage point of the target in 183 of them. The cumulative annualized CPI…

Published in the National Post on March 23rd, 2015

By: William Robson

William Robson is president and CEO of the C.D. Howe Institute.

Scary headlines sell, and the world economy since the 2008 crisis has given writers of scary headlines lots of material. Lately, the large type has featured two themes: Deflation, which threatens to suck the major economies into a black hole; and currency wars, which will have us at each other’s throats as we sink.

Hoping a turn of phrase can compete with the prophets of disaster, I must protest: this is altogether too much of a bad thing. The deflation doomsayers and the currency-war Jeremiahs can’t both be right. Yes, deflation is a threat — in theory. But probably…

Published in The Globe and Mail on February 17, 2015

By: Christopher Ragan

Christopher Ragan is an associate professor of economics at McGill University and a research fellow at the C.D. Howe Institute.

Greece and Europe are not yet out of the woods, even with the imminent deadline on the existing fiscal arrangement now extended by a few months. This extra time will give the Greek debtors and the European creditors the opportunity to think a lot – and to compromise even more. Below I sketch out a fiscal plan that is conceptually simple but politically difficult, with plenty of compromise on both sides.

In the ongoing game of fiscal brinkmanship, the Germans and other creditors insist on…

Published in the Globe and Mail on February 11, 2015

By: Christopher Ragan

Christopher Ragan is an associate professor of economics at McGill University and a research fellow at the C.D. Howe Institute.

Many observers of monetary policy are once again accusing the Governor of the Bank of Canada of favouring a weaker Canadian dollar as a way to promote our exports. Once again, both Stephen Poloz and the workings of monetary policy are being misunderstood.

Mr. Poloz has been thinking about monetary policy since his student days. His PhD thesis was about the determinants of money demand, a central topic for any central bank. He then spent 14 years at the Bank of Canada, thinking through the many…

Published in The National Post on February 11, 2015

By: William Robson

William Robson is president and chief executive officer of the C.D. Howe Institute.

Canadians have had some time to adjust to the Bank of Canada’s surprise cut in its policy interest rate to 0.75% on Jan. 21. With the Bank’s next interest-rate announcement coming on March 4, now seems a good time to take stock of what the January cut in the overnight rate target meant, and what the Bank of Canada might, and should, do next.

January’s cut shocked financial markets. After more than four years with the policy rate at 1.00%, most of us expected its next move to be upward. The Canadian dollar closed down a cent and a half on the…