March 18, 2021
Easy Money Unlikely to Cause Financial Instability in Canada
- On the heels of the Bank of Canada reiterating they will keep interest rates low, authors Jeremy Kronick and Steve Ambler explore the effect monetary policy has on financial stability and consider whether Canadians should be worried about the impact of low interest rates.
- To study the impact of monetary policy on financial stability, Ambler and Kronick use a novel financial vulnerabilities barometer and estimates the impact monetary policy has had on the barometer from 1990-2019.
- Their findings suggest that the Bank of Canada can conduct its monetary policy with confidence that there will be few or no negative side effects on financial stability.
