Carney backs inflation targeting as best for UK, Canada
February 13, 2013 4:56 AM EST
Mark Carney, the governor of the Bank of Canada who will switch jobs to take the helm of the Bank of England in July, said on Monday that inflation targeting is still the best approach for central banks in both the UK and Canada.
In remarks to Canadian legislators, Carney emphasized what he told a British members of Parliament last week when he cooled expectations that he would push for sweeping changes in British monetary policy.
Carney, who was asked by Canadian opposition legislator Guy Caron for his views on targeting nominal GDP - a mix of growth and inflation - rather than inflation only, did recommend a periodic review of that mandate with the option of changing it.
Carney, in a speech in December, had mentioned nominal GDP-targeting in as an extreme measure in economies where central banks have run out of more conventional tools to boost their economies, leading some to speculate he would push for it at the Bank of England.
"It is still the position of the Bank of Canada that a flexible inflation targeting framework is the best in the world," Carney said on Tuesday.
"I share (the idea of) flexible inflation targeting here and, as I said last week, in the United Kingdom as well," he added.
He stressed that Canada and the UK had little in common in terms of economic challenges.
"We don't have large public and private indebtedness, we are not at zero lower bound (interest rates), we don't have the problems in the financial sector that exist over there," he said.
One big advantage in Canada is that the central bank and the government review the inflation targeting framework every five years, he said.
"It's a chance to reaffirm the framework or change the framework," he said.
Before renewing its 2 percent inflation target in November 2011, the Canadian central bank had conducted research into the possibility of targeting a lower inflation rate, switching to price-level targeting, or formally adding financial stability as a target of monetary policy. It opted against any of these.
The Bank of Canada has had an inflation-control target since 1991, initially aiming for 3 percent and lowering it to 2 percent inflation since 1995.
(Reporting by David Ljunggren; Editing by Jeffrey Hodgson and Leslie Adler)
Most Popular Slideshows
- Kate Middleton Suffocated in Kensington Palace, Queen Elizabeth Reported War With The Duchess [PHOTOS]
- Chris Martin Dating Reports: Jennifer Lawrence Vs Gwyneth Paltrow [PHOTOS]
- 2014 MTV Video Music Awards: Everything To Know [PHOTOS]
- British Style Icon Kate Middleton Fashion Talk With Camilla Parker-Bowles Daughter-In-Law [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- 4.7-Inch, 5.5-Inch iPhone 6 Models Confirmed with Similar Build, Cam Features & 300+ Screen Pixels on Release Date
- Apple iPhone 6 Release Date, iPhone 6C or 6L Anticipation: Three Things Should Matter To New Phone Shoppers
- Xiaomi Mi4 vs iPhone 6: Why Forecasts Favor Mi4 as The Next Best Phone Against iPhone 6
- James Foley: More Chilling Information Revealed By Escaped Journalists
- James Foley Beheading Video Has Play-Acting Portions – Video Experts Say
- Samsung Galaxy Note 3 LTE Android 4.4.2, Android 4.4.4Guide: Installation and When to Hit Your Region
- Companies Push Back IPO Plans Due to Mega Alibaba Share Launch