After the 2008 financial crisis, the Bank of Canada was left mostly alone to mop up.
It kept interest rates ultra-low, and then it cut them in 2015 after oil prices crashed. In the meantime, the government of former Prime Minister Stephen Harper rushed to balance the budget, and balked at doing potentially unpopular things that might have curbed Canada’s credit binge.
That experience appears to have left a mark at the central bank. Its leaders keep bringing up the importance of achieving a better “policy mix,” taking the pressure off monetary policy to simultaneously stoke economic growth, deflate housing bubbles and contain inflation.
“Monetary policy can’t do it all,” Carolyn Wilkins, the senior deputy governor, said at the end of a day-long conference on monetary policy at the Bank of Canada’s headquarters in Ottawa on September 14.
You hear that a lot from central bankers.
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