Your testimony today has confirmed something that was offered to the committee from an expert witness a while ago, which I think was then speculative. He said, “Both the Fed and the Bank of Canada will tolerate whatever inflation occurs in 2021 as both transitory and salutary” and that inflation would increase to 3% and likely go a little higher than that.
If I understood you correctly, you said that you do expect to hit that outward bound at 3%, come back down to 2%, come up a little bit more and then come back down. It sounds like fairly precise targeting.
I have maybe a two-part question. How much inflation will you tolerate in 2021 and 2022 and keep interest rates where they are?
On which factors does this fairly precise guess about this up and down between 2% and 3% rely?