Canada Economics

Canada Economics Weekly

25 July, 2011

Headwinds, tailwinds and monetary policy

The key message in the July Monetary Policy Report: short term interest rates will remain unusually low for a considerably lengthy period. In a technical box towards the end of the report, the Bank gave its explanation for why this might be the case; which was that interest rates sometimes need to remain simulative long after the economy returns to potential and inflation on target. This view was reinforced by what the Governor said in the question and answer session, that “some” policy stimulus

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