Canadian Finance Minister Jim Flaherty said he’s considering a more explicit mandate for the Bank of Canada, rather than adding to the central bank’s responsibilities.
Flaherty, speaking to reporters in Ottawa, said he’s had discussions with Bank of Canada Governor Mark Carney ahead of reaching a new agreement on the central bank’s mandate.
“The governor and I have discussed this at some length,” Flaherty told reporters in Ottawa. “We are in line with each other on this. We’re not talking about a new policy or a new mandate for the Bank of Canada. What we are talking about is being more explicit about what the mandate of the Bank of Canada is.” He did not elaborate.
Under the current agreement, which expires at the end of this year, the Bank of Canada targets a 2 percent annual inflation rate. Since the last renewal in 2006, the central bank said it would study pegging the level of the consumer-price index instead, as well as reducing the inflation target and using policy to counter asset-price bubbles.
The House of Commons Finance Committee voted yesterday to study whether the Bank of Canada’s monetary policy mandate should be broadened to include other targets such as full employment. The committee will hold at least one meeting before the end of November on the matter.
The Bank of Canada has done a good job of keeping inflation at an average growth rate of 2 percent since the target was adopted in 1991, said Craig Alexander, chief economist at Toronto Dominion Bank.
“If it ain’t broke, don’t fix it,” Alexander said in a phone interview. “The Bank of Canada has done a remarkable job of achieving its actual inflation objective.”
Seven of 11 economists surveyed by Bloomberg from Sept. 22 to Sept. 29 said the bank’s goal will not change when it comes up for renewal by the end of the year.
Canada’s annual inflation rate unexpectedly accelerated to 3.2 percent in September, Statistics Canada reported today, while a measure of price increases that factors out volatile items reached 2.2 percent, the highest in almost three years.
Bank of Canada spokesman Jeremy Harrison declined to comment on the issue.