December 15, 2007 Introduction: Recent Research on Inflation Targeting Bank of Canada Review - Winter 2007-2008 John Murray The inflation targeting framework that Canada introduced in 1991 has played a significant role in the exceptional economic performance that the country has experienced in recent years. Understanding the factors that have contributed to the success of the current inflation-targeting framework, and investigating the various ways in which it might be improved in the future, are an important part of the Bank of Canada's medium-term research program. Content Type(s): Publications, Bank of Canada Review articles
December 15, 2007 Bank of Canada response to announcement by Pan-Canadian Investors Committee The Bank of Canada is pleased that substantial progress towards establishing a broad framework for the restructuring of the third-party structured asset-backed commercial paper (ABCP) under the Montreal Accord has been made by the parties involved. Content Type(s): Press, Market notices
December 14, 2007 The Costs of Inflation in New Keynesian Models Bank of Canada Review - Winter 2007-2008 Steve Ambler Ambler describes three new channels through which inflation affects economic welfare in New Keynesian models. These channels were absent from traditional analyses and may have caused researchers to underestimate the costs associated with variable inflation, even at relatively low levels of inflation. The article concludes with a preliminary assessment of the quantitative importance of the new channels and their significance for monetary policy. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Inflation: costs and benefits, Monetary policy framework
December 13, 2007 Central Bank Performance under Inflation Targeting Bank of Canada Review - Winter 2007-2008 Marc-André Gosselin Gosselin examines and reports on the various factors that contribute to successful inflation targeting. Using a panel of 21 inflation-targeting countries over the period 1990Q1-2007Q2, Gosselin finds that the ability of central banks to hit their targets varies considerably. Some of these differences can be explained by exchange rate fluctuations, fiscal deficits, and differences in financial development. Others are explained by differences in the targeting framework itself and the manner in which it is implemented. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Inflation targets, Monetary policy framework
December 13, 2007 Results of the 13 December 2007 Term PRA Transaction The results of today's term PRA operations Content Type(s): Press, Market notices
December 12, 2007 Expansion of List of Securities Eligible as Collateral for Use Under Bank of Canada Standing Liquidity Facility Under its Standing Liquidity Facility (SLF), the Bank of Canada is prepared to provide liquidity on a daily basis to financial institutions that participate directly in the payments systems operated by the Canadian Payments Association. Loans made by the Bank of Canada must be fully collateralized. Content Type(s): Press, Market notices
December 12, 2007 Bank of Canada Temporarily Expands List of Securities Eligible for Term PRA Transactions Today, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing measures designed to address elevated pressures in short-term funding markets. Content Type(s): Press, Market notices
December 11, 2007 The Zero Bound on Nominal Interest Rates: Implications for Monetary Policy Bank of Canada Review - Winter 2007-2008 Claude Lavoie, Stephen Murchison One of the most important factors that must be considered if countries are thinking about lowering the target level of inflation much below 2 per cent is the zero interest bound. Targeting inflation rates that are too low, the authors note, may restrict the ability of monetary policy to respond to economic shocks by limiting the amount by which interest rates can be eased. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Inflation: costs and benefits, Interest rates, Monetary policy implementation
December 10, 2007 Inflation Targeting, Price-Level Targeting, and Fluctuations in Canada's Terms of Trade Bank of Canada Review - Winter 2007-2008 Donald Coletti, René Lalonde Coletti and Lalonde compare inflation targeting and price-level targeting in the context of a small open economy subject to sizable terms-of-trade shocks. The authors summarize recent research that compares the ability of price-level targeting and inflation targeting to stabilize the macroeconomy when confronted with shocks similar to those experienced by Canada in recent years. Their preliminary results suggest that price-level targeting may represent a feasible alternative to traditional inflation targeting. Their article also provides insight into the direction of current research in this area at the Bank. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Inflation and prices, Monetary policy framework
December 10, 2007 Reflections on Developments in the Canadian Financial System Remarks David Dodge Canadian Club of Toronto and the Empire Club of Canada Toronto, Ontario It has become a tradition that I deliver a speech late in the year on issues related to the financial system. When I say "financial system," I mean financial institutions and markets, together with the clearing and settlement systems through which financial assets flow. Content Type(s): Press, Speeches and appearances, Remarks