Lower global growth and interest rates are a challenge for central bankers around the world. Senior Deputy Governor Carolyn A. Wilkins explains that Canada is well-positioned to secure prosperity and avoid a long period of slow growth if we take the right steps.
Watch Senior Deputy Governor Wilkins speak to the Economic Club of Canada. Read the full speech.
Canada has avoided secular stagnation
Global growth and interest rates are lower than they used to be, in part because the population is aging and gains in productivity have slowed. But immigration and innovation have helped Canada avoid the kind of long period of slow growth and weak demand seen in Japan in recent decades.
Canada and other advanced economies will need to do more to support prosperity and avoid suffering from chronically slow growth and weak demand in the future.”
The right monetary policy has helped
The Bank of Canada’s strong policy framework, which targets low, stable and predictable inflation, has helped support growth and employment. We are always thinking about ways to improve that framework, along with the tools we use to keep inflation close to 2 percent.
The work that we’re undertaking now to renew our inflation-control agreement and tool kit will only make that framework stronger for a world with low interest rates.”
See Toward 2021 for more information about the renewal of our monetary policy framework.
Further innovation and investment are key
We need to do more to support prosperity and avoid slow growth in the future. Boosting productivity with government policies that support investment and innovation will help. The private sector must be involved as well, particularly in areas like workplace skills training.
Building prosperity is up to us. The best policies to guard against stagnation and improve living standards are those that raise the trend line for growth.”
You might also like
Monetary policy: It’s perfectly imperfect
Governor Tiff Macklem speaks about the effectiveness—and limitations—of monetary policy. He highlights how raising and lowering the policy interest rate ultimately keeps inflation low, stable and predictable, despite significant shocks to the economy.
February 6, 2024
How higher interest rates affect inflation
When the Bank of Canada changes its policy interest rate, it affects every part of the economy – but that does not happen all at once. Learn more about how raising and lowering interest rates takes effect through the monetary policy transmission mechanism.Content Type(s):
Publications,
The Economy, Plain and Simple
December 21, 2023