Precision Targeting: The Economics – and Politics – of Improving Canada’s Inflation-Targeting Framework

Christopher Ragan
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Christopher Ragan: McGill University

C.D. Howe Institute Commentary, 2011, issue 321

Abstract: The Bank of Canada’s inflation-targeting framework, since its inception in 1991, has proven itself a success. Yet further improvements in the system should be considered seriously for inclusion in a renewed monetary policy agreement, between the Bank of Canada and the federal government, and renewal is due in 2011. Some improvements would deliver genuine economic benefits to millions of Canadians over the years ahead. Lowering the target rate for consumer price inflation in particular would help secure the domestic purchasing power of our financial assets. Such a change, however, should be part of a coherent framework, which addresses financial stability goals and political imperatives.

Keywords: Monetary Policy; Bank of Canada; inflation targeting; Statistics Canada; CPI; Ministry of Finance; Office of the Superintendent of Financial Institutions (search for similar items in EconPapers)
JEL-codes: E58 (search for similar items in EconPapers)
Date: 2011
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