In 1991, Canada became the second country to adopt an inflation target as a central pillar of its monetary policy framework. The regime has proven much more successful than initially expected, both in achieving price stability and in stabilizing the real economy against a wide range of shocks....

In this speech, Marian Bell, of the Monetary Policy Committee discusses three current issues in the context of the role and limitations of monetary policy: house prices, discretion and deflation. She suggests that areas such as house prices are not suited to monetary policy control and argues...