Daily Archives: November 1, 2011

Claire Jones

The Bank of Canada is one central bank that has flirted with the idea of dropping its inflation target. Perhaps even as soon as at the end of this year.

Among the options was switching to a price-level target, an idea which Charles Evans, the president of the Chicago Fed, is also keen on.

Canada has now ruled that out. This from Bloomberg:

Canadian Finance Minister Jim Flaherty said the Bank of Canada’s mandate will remain unchanged, as the government prepares its five-year renewal of the central bank’s inflation target by the end of this year…
…”We will announce the range, of course, as we do,” Flaherty said. “Other than that, the mandate remains the same for the Bank of Canada.”

The decision by Canada, one of inflation targeting’s earlier adopters, is significant.

But, just because a price-level target is off the cards for now, does not mean that it will not be adopted at a later date.  Read more

Claire Jones

Andy Haldane, the Bank of England’s executive director for financial stability, is considered one of the most original thinkers in any central bank.

Mr Haldane, to his credit, not only picks holes in existing practices, but also suggests possible fixes.

His call for regulators to lower capital and liquidity buffers has, however, largely fallen on deaf ears, with the majority of the interim Financial Policy Committee against it. But another of his ideas appears to be more popular. Read more

Worrying things happening in the eurozone today, but Britain still posted 0.5 per cent growth in the third quarter. Relief rather than reassurance is the right response.

Relief is apt both because the City and government officials thought the figure would be 0.3 per cent. But before anyone goes away thinking that third quarter growth is close to Britain’s 0.6 per cent post-War average, they need to take account of five areas for concern about these figures.  Read more