No one monetary policy target optimal – Bank of Canada paper
Flexible inflation targeting one of best performers in “horse race” with other options
A Bank of Canada paper concludes that none of several potential monetary policy models “dominates on all margins”. However, the central bank’s current flexible inflation target is one of the three “most robust” systems tested.
The central bank is currently preparing to agree policy targets with the Canadian government for 2021–26. Currently, the inflation target is the “2% midpoint of a 1% to 3% control range”. Canada has maintained a 2% target since 1995.
The paper, authored by José Dorich
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