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Inflation Control Agreement

inflation and its objective or inflation, .b. yt or (logarithms) of real and potential expenditure; and it refers to the policy rate. Nous prenons notamment en compte les poids (1.5,0,5,0.5) et ““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““““`”“““““““““““““““““““““““““““““` des poids plus équilibrés, En attachant une petite importance à la stabilisation de l`endettement des ménages: si l`on se réfère à plus de 400 ans d`expérience du Canada dans un cadre de politique monétaire axé sur l`inflation, le cadre s`est révélé beaucoup plus fructueux que prévu initialement. In retrospect, we underestimated how quickly credibility could be achieved and the effectiveness of entrenched inflation expectations would help keep inflation close to the target. Managing the inflation target has played an important role in ensuring its credibility. In particular, the underlying joint agreement required the federal government to achieve the objective, while giving the BoC the operational independence necessary to achieve it. In addition, the agreement served as an implicit mechanism for strengthening coherence between monetary and non-monetary components of the overall policy mix, including financial policies and financial regulation and supervision. The history of Canada`s inflation target dates back to June 1970, when Canada moved away from the Bretton Woods system to adjust the exchange rate to inflationary pressures and then build abroad. [5] This exit allowed the BoC to need a target that could replace the exchange rate as a nominal anchor for monetary policy. The first objective of this type that the BoC experienced was the M1 silver stock, which began in 1975. Although the BoC has generally been successful in meeting its monetary growth targets, the expected shift to inflation has proved elusive: overall inflation in the consumer price index averaged nearly 8% between 1975 and the abandonment of the target in 1982 (Figure 1). and expectations of high inflation have been so consolidated that the subsequent slowdown in inflation could only be achieved at the cost of a sharp tightening of monetary policy and a deep recession that resulted. These three factors have helped to anchor inflation expectations around a credible objective, and this anchoring has made it easier for monetary policy to remain within the objective and has established a powerful virtuous circle.

Another advantage is that entrenched inflation expectations leave monetary policy more flexible to account for its effects on output and employment stability and on financial stability.

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