Op-Eds
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…
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.
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…
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…
Published in the Financial Post on April 15, 2010
By Philippe Bergevin And David Laidler
Among the more interesting proposals for Canadian monetary policy after 2011, when the Bank of Canada's current inflation-control agreement with the Minister of Finance expires, is a target for the time path of the price level itself, rather than the inflation rate. More urgently, however, the Bank must achieve a delicate balance as it tries to spur a still tentative recovery while avoiding excessive inflation next year. Intriguingly, achieving this balance would be much easier were price-level targeting already in place.
Bank of Canada policies are not completely independent of politics, not least because its Governor is…
