Search

Inflation Overshoot Has Bank of Canada Weighing Mandate Tweaks


Bank of Canada Governor Tiff Macklem is in the final stages of a mandate review that could see him request more authority from Prime Minister Justin Trudeau’s government to run the economy hot.


The central bank’s five-year inflation targeting mandate is up for renewal this year, with few signs a major overhaul is in the works.


But Macklem might lean toward design and communication changes to the 2% target, perhaps by focusing on labor-market metrics or putting more emphasis on the Bank of Canada’s allowable range for inflation. That could give him some more flexibility to address under-performance in the economy at a time when other central banks are doing the same.


The Federal Reserve adopted so-called average inflation targeting last year -- on top of its dual maximum employment mandate -- that allows the U.S. central bank to overshoot its 2% target, though developments last week suggest there are limits to its tolerance. The European Central Bank is also in the midst of potentially its biggest policy overhaul in almost two decades.


Options the Bank of Canada is likely considering in its review include the following:


Read the full article HERE

11 views0 comments
Recent Posts
Quick links