Finance committee  This is an excellent question. That's basically why we have a 2% target for inflation. Usually, that provides us with fiscal room to adjust the interest rate according to the shocks. When inflation persistently remains above that percentage, the next risk is increased. The situat

Finance committee  If I have grasped the meaning of what you were saying, if the interest rate remains steady, the stress on pensions will increase. Is that what you're asking?

Finance committee  It is of strong importance, but I do think of the two things as separable. That, I think, is the important distinction we should draw from that historical episode that you refer to. In the historical episode you refer to, the central bank was actually issuing money so that the go

Finance committee  I do like our scenario better, but I would respond that the U.S. fiscal deficit has come down very significantly since its peak. It's about one third of the size it was at the peak. Progress has been very real despite everything that we've seen. Nevertheless, yes, as a central b

Finance committee  There's no question; programs like that play a role in adding to that momentum and perhaps in cushioning the downside when uncertainty was at its peak. We think the main variable at work now is uncertainty. Companies that are putting their real money on the line want to be very

Finance committee  The actual mechanism is one where the central bank expands its balance sheet beyond its normal rate of acquisition of government debt. That creates a higher level of settlement balances in the banking system. So it's liquidity in the sense that you describe. That liquidity is th

Finance committee  The situation in which this question would come up would be one that is particularly dire. The outlook for the economy would be very poor and the inflation outlook would be extremely below our target, with perhaps a risk of deflation. It is a context in which all policy-makers wo

Finance committee  Yes.

Finance committee  Yes.

Finance committee  I think there's a very low threat level at this stage. Inflation is below target now, and we have excess capacity in the output space, and we believe we have even more excess capacity when we look into labour market space. So we expect to have our hands full working off those exc

Finance committee  I think having a strong fiscal situation is an excellent ingredient to carry forward. We went through a terrible shock in the 2008-09 period, and the runback has been taking a long time, but we have to be prepared for the next shock. We have no idea what it will be like. So I thi

Finance committee  I believe that's a question for Minister Flaherty. I can only say from the Bank of Canada's point of view, as we laid out in 2009 in the midst of the crisis, all central banks have reviewed the full range of options. These are options that were not contemplated for a long time bu

Finance committee  We set the monetary policy with the goal of getting inflation back to target. As we said in the opening remarks, the fact that inflation has persistently been below target means that we have to take more weight on the possible downward biases on inflation, because that would mean

Finance committee  Yes.

Finance committee  I would say first of all that we all acknowledge that what we've been through has been not a pleasant experience for all Canadians and that young Canadians in particular have borne, as you suggest, more of the cost. My personal belief is that the reason for this is that the vast