David Dodge Presents His Views on Interest Rates and the Economy
David Dodge, former Governor of the Bank of Canada, presented his views on the appropriate balance of monetary and fiscal policies for a slow-growth global economy on December 2nd at a C.D. Howe Institute luncheon. In his remarks, entitled “The Role of Macro-Economic Policies in an Era of Global Economic Stagnation,” Dodge noted: “We are stuck in a low-growth global economy characterized by excess supply and low inflation, a low natural interest rate, low productivity growth, and current account imbalances.”
What to do?
Dodge concluded: “At the present time, both price and financial stability would be better served by somewhat higher policy interest rates – rates that would not imply a sacrifice of employment and growth if – and this is a big if – fiscal policy were more expansionary.”