Inflation Targeting: A Canadian Perspective
by Angelo Melino
University of Toronto
Inflation targeting in Canada recently celebrated its twentieth
anniversary. As a monetary policy framework, it has been
extremely successful and has earned widespread support. But
the recent financial crisis has provided the largest challenge
to the inflation-targeting framework since the political controversy
that followed its introduction. The Bank of Canada, like
many other central banks, is thinking hard about how it can
contribute to financial stability and how to integrate financial
stability concerns with its inflation-targeting framework.
I expect that we’ll see a number of responses in Canada to
financial stability concerns, but the basic inflation-targeting
framework will not be much affected. The recent crisis has
crowded out discussion of issues such as inflation targeting
versus price-level-path targeting, and the appropriate rate of
increase in the price level.
JEL Codes: E52, E58.
(PDF, 27 pages 318 kb)
Discussion by Charles Goodhart