BoC’s Poloz: Bank seriously considered possibility of raising inflation target

Bank of Canada's Governor Stephen Poloz was on the wires from Vancouver, stating that the central bank "seriously" considered the possibility of raising inflation target. Also, he added that makes sense to separate monetary policy from efforts to stabilize financial system.

Key headlines (via Reuters):

  • Recent experience shows unconventional measures give bank more room to manoeuvre than previously thought
  • Raising target would impose higher inflation tax on economy; pushing inflation to 3 pct might be difficult to do
  • Pushing inflation to 3 pct might require economic fluctuations, given expectations well-anchored at 2 pct
  • Macroprudential policy best placed to deal with threats to financial stability, whereas interest rates are a very blunt tool
  • Says has not seen convincing evidence there is monetary policy approach that is better than inflation targets

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