The Bank of Canada’s plan to cool inflation
The Decibel
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Monitary Policy - Why Don't We Target Inflation?
Since the 19 nineties, the goal of monitary policy has been to hit two % inflation. The way they do that is by influencing interest rates to speed up or slow down economic activity. They can also affect things like the exchange rate for the canadian dollar. By moving this little, very short term rate, they have a whole range of impacts throughout the entire economy. So the question of whether they're moving fast enough is a live question. But if you raise interest rates to day, you're not going to change the inflation rate next week. It takes months and months and months,. often 18 to 24 months, to work its way through the economy.
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