The Bank of Canada should restore the important role of tracking the money supply as a predictor of future inflation and economic performance, according to a major new book on the conduct of monetary policy from the C.D. Howe Institute.
In “Navigating Turbulence: Canadian Monetary Policy Since 2004,” authors Steve Ambler and Jeremy Kronick assess the BoC’s policies from 2004, through the turbulence of the 2008/09 recession, the recovery and up to the current period. Overall, they give the Bank high marks for its stewardship. However, the Bank faces key new challenges posed by the current low-interest-rate, low-inflation environment that require response, according to the authors.