Friday, August 28th21.8°C
27214
26753

Bank of Canada trying to determine why inflation has been on decline

MONTREAL - A senior official says the Bank of Canada is still trying to figure out exactly why inflation has been on the decline since 2012 and fallen below its ideal target of two per cent.

In what he calls his last speech as the central bank's senior deputy governor, Tiff Macklem says the economic puzzle appears to reflect a combination of bad and good disinflation.

He says bad disinflation stems from persistent excess supply in the economy, while good disinflation results from more competition in the retail sector.

Macklem says in theory, monetary policy should work to counter bad disinflation stemming from weak demand.

But in practice, he says it's more like an exercise in risk management, as there's still considerable uncertainty surrounding the bank's measurements and projections.

Macklem says while the fundamental drivers of growth and future inflation appear to be strengthening, inflation is expected to remain well below target for some time, which means the downside risks have grown in importance.

"We need to do our best to determine why inflation is below target, but no matter how hard we try, there will be uncertainty about our diagnosis," Macklem said in remarks prepared for delivery at Concordia University.

"Our work at the Bank of Canada is both to sharpen the analysis as much as we can and, at the same time, to take account of the risks and uncertainties as we determine the appropriate course for monetary policy to achieve our inflation target."

Some uncertainty about the bank's judgments include how long increased competition will depress inflation, he said. Increased retail competition will continue to drive prices lower for about another year.

While there are no signs of a rebalancing towards exports and business investment in Canada, the strengthening of the global economy and the recent depreciation of the loonie should foster a broadening of the composition of growth in Canada, Macklem said.

The Canadian Press


Read more Business News

26764


Recent Trending




Today's Market
S&P TSX13865.07+98.40
S&P CDNX555.67+10.10
DJIA16643.01-11.76
Nasdaq4828.32+15.62
S&P 5001988.87+1.21
CDN Dollar0.75730.00
Gold1119.50-5.10
Oil45.26+2.70
Lumber237.20-9.70
Natural Gas2.719+0.055

 
Okanagan Companies
Pacific Safety0.165+0.005
Knighthawk0.010.00
QHR Technologies Inc1.29+0.05
Cantex0.04-0.01
Anavex Life Sciences1.34-0.05
Metalex Ventures0.055+0.000
Russel Metals21.41+0.43
Copper Mountain Mining0.64-0.01
Colorado Resources0.075-0.005
ReliaBrand Inc0.004-0.000
Sunrise Resources Ltd0.025+0.005
Mission Ready Services0.07+0.01
Decisive Dividend Corp2.75+0.14

 





FEATURED Property
2364115#52 1999 hwy 97s
2 bedrooms 1 baths
$73,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


Agree to ask questions

Photo: Thinkstock.comThe STORY: I think, said Janet to herself, that I just figured out a solution to my problem of letting the prospect run the meeting.With that thought in mind, she got out of her c...


Your business is not a bank

Photo: Thinkstock.comYour plumbing business is not a bank. But when you are giving terms to customers that exceed what you get from your suppliers, you become one. And every time that someone does not...


Begin with the end in mind

Photo: ContributedWe humans love our dates: birthdays, anniversaries, 9/11, the Ides of March - our lives are intimately woven within the tapestry of the calendar. So it should come as no surprise whe...

_



26509

26586


Member of BC Press Council


26780