The Governor of the Bank of Canada recently gave a speech on inflation targeting (via). It was a sensible enough speech except for one thing. (Well, perhaps more than one, but I will let Scott Sumner deal with that.)
What I am going to harp on is: no mention of Australia.
If you are going to discuss sensible monetary policy, it is past time when careful meditation on the Australian experience should be required. No recession since 1991 is a performance to ponder. But the point is much broader than that. Australia is an extremely successful public policy example. What we do works, and was working very well before the recent commodity price surges.
It is just that the success is particularly stark in monetary policy. The Reserve Bank of Australia's monetary policy target of an 2-3% average level of inflation over the business cycle has been extremely successful. So successful that for the Governor of the Bank of Canada to make no mention of it at all in a speech on inflation targeting is risible.
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