The Bank of Canada should restore the important role of tracking the money supply as a predictor of future inflation and economic performance, according to a major new book on the conduct of monetary policy from the C.D. Howe Institute.In “Navigating Turbulence: Canadian Monetary Policy Since...

Over the past decade, inflation in many countries has been tepid, despite rock-bottom interest rates and different forms of unconventional stimulative monetary policy, including quantitative easing. For its part, Canada has averaged 1.5 percent inflation over this period, below the 2 percent...

This paper sets out to investigate two issues: first, it briefly provides a retrospective look at whether the stance of monetary policy was appropriate for hitting the Bank of Canada’s inflation target during 2018 and 2019, and second, it examines how to determine in real time whether monetary...

The Bank of Canada’s mandate is to target an inflation rate of 2 percent, but financial instability can have important effects on economic activity, which can influence the Bank’s ability to hit that target. The concern is that monetary policy and financial stability might work at...

The current pandemic and the accompanying economic lockdowns have led to the deepest economic downturn since the Great Depression. Fiscal and monetary authorities have acted in kind, with unprecedented stimulus and expansion of balance sheets. The Bank of Canada, for its part, dropped the...

With rising inflation top-of-mind for Canadians, a major question is: Can we predict its future? This Commentary shows that growth in the money supply is a useful predictor of inflation, and examines why and when.Since the early 1990s, the Bank of Canada has pursued a successful...