· Tiff Macklem Wiki · Bank of Canada WikiFlexible inflation targeting in a shock-prone world
Read full speech on bis.org ↗ContextRemarks in Mexico City at the conference for Banco de México's 100th anniversary; the Bank of Canada keeps inflation low and stable in a world of repeated economic shocks.
Why it mattersIt draws lessons from the post-pandemic surge for how forcefully to react when supply shocks keep pushing prices up.
Problems raised
- Supply shocks are more frequent.
- Inflation became high and persistent after the pandemic.
- Core inflation is harder to measure.
Solutions proposed
- Raise rates forcefully once inflation proves persistent.
- Keep long-term expectations anchored.
- Improve measures of core inflation.