Editing Economy of Canada (section)

===Inflation targeting===
During the period that [[John Crow]] was Governor of the Bank of Canada—1987 to 1994—there was a worldwide [[Early 1990s recession|recession]] and the bank rate rose to around 14% and unemployment topped 11%.<ref name="Blake 2007">{{citation |editor=Blake |title=Transforming the Nation: Canada and Brian Mulroney |date=2007}}</ref> Although since that time inflation-targeting has been adopted by "most advanced-world central banks",<ref name="beyond_inflation-targeting_2011" /> in 1991 it was innovative and Canada was an early adopter when the then-Finance Minister [[Michael Wilson (Canadian politician)|Michael Wilson]] approved the Bank of Canada's first inflation-targeting in the 1991 federal budget.<ref name="beyond_inflation-targeting_2011" /> The inflation target was set at 2 per cent.<ref name="Monetary_Policy_Report_2015_07" /> Inflation is measured by the total [[consumer price index]] (CPI). In 2011 the Government of Canada and the Bank of Canada extended Canada's inflation-control target to December 31, 2016.<ref name="Monetary_Policy_Report_2015_07" /> The Bank of Canada uses three unconventional instruments to achieve the inflation target: "a conditional statement on the future path of the policy rate", [[quantitative easing]], and [[credit easing]].<ref name="MPR_2009">{{cite report |title=Monetary Policy Report |date=April 2009 |access-date=August 6, 2015 |publisher=Bank of Canada|url=https://www.bankofcanada.ca/2009/04/23-april-2009/}}</ref>

As a result, interest rates and inflation eventually came down along with the value of the Canadian dollar.<ref name="Blake 2007" /> From 1991 to 2011 the inflation-targeting regime kept "price gains fairly reliable".<ref name="beyond_inflation-targeting_2011" />

Following the [[Great Recession]], the narrow focus of inflation-targeting as a means of providing stable growth in the Canadian economy was questioned. By 2011, the then-Bank of Canada Governor [[Mark Carney]] argued that the central bank's mandate would allow for a more flexible inflation-targeting in specific situations where he would consider taking longer "than the typical six to eight quarters to return inflation to 2 per cent".<ref name="beyond_inflation-targeting_2011">{{citation |title=Bank of Canada to get marching orders to look beyond inflation targeting |author=Jeremy Torobin |author2=Bill Curry |location=Ottawa, Ontario |publisher=The Globe and Mail |date=October 16, 2011 }}</ref>

On July 15, 2015, the [[Bank of Canada]] announced that it was lowering its target for the overnight rate by another one-quarter percentage point, to 0.5 per cent<ref name="Bank_of_Canada_2015_July">{{citation |url=http://www.bankofcanada.ca/2015/07/fad-press-release-2015-07-15/ |publisher=Bank of Canada |title=Bank of Canada lowers overnight rate target to 1/2 per cent |access-date=August 6, 2015}}</ref> "to try to stimulate an economy that appears to have failed to rebound meaningfully from the oil shock woes that dragged it into decline in the first quarter".<ref name="IMF_2015_07">{{citation |title=IMF again cuts Canada's growth forecast ahead of interest rate decision |author=David Parkinson |publisher=The Globe and Mail |date=July 9, 2015 |access-date=August 6, 2015 |url=https://www.theglobeandmail.com/report-on-business/economy/growth/imf-again-cuts-canadas-growth-forecast-as-oil-shock-lingers/article25385528/}}</ref> According to the Bank of Canada announcement, in the first quarter of 2015, the total [[Consumer price index]] (CPI) inflation was about 1 per cent. This reflects "year-over-year price declines for consumer energy products". Core inflation in the first quarter of 2015 was about 2 per cent with an underlying trend in inflation at about 1.5 to 1.7 per cent.<ref name="Bank_of_Canada_2015_July" />

In response to the Bank of Canada's July 15, 2015 rate adjustment, Prime Minister [[Stephen Harper]] explained that the economy was "being dragged down by forces beyond Canadian borders such as  global oil prices, the European debt crisis, and China's economic slowdown" which has made the global economy "fragile".<ref name="reuters_2015">{{citation |url=https://www.reuters.com/article/canada-cenbank-politics/after-rate-cut-canada-pms-office-says-global-woes-hit-economy-idUSL2N0ZV1TE20150715|publisher=Reuters |first=Allison|last=Lampert|date=July 15, 2015 |title=After rate cut, Canada PM's office says global woes hit economy |access-date=August 7, 2015}}</ref>

The [[Chinese stock market]] had lost about US$3 trillion of wealth by July 2015 when panicked investors sold stocks, which created declines in the [[commodities markets]], which in turn negatively impacted resource-producing countries like Canada.<ref name="boom2recession_2015">{{citation |url=http://www.macleans.ca/economy/economicanalysis/how-canadas-economy-went-from-boom-to-recession-so-fast/ |title=How Canada's economy went from boom to recession so fast: An in-depth look at the perfect storm that pushed Canada into recession |author=Chris Sorensen |author2=Aaron Hutchins |date=July 15, 2015 |access-date=August 8, 2015 |publisher=Macleans}}</ref>

The Bank's main priority has been to keep inflation at a moderate level.<ref>{{Cite web | url=http://www.bankofcanada.ca/rates/indicators/key-variables/inflation-control-target/ |title = Inflation-Control Target}}</ref> As part of that strategy, interest rates were kept at a low level for almost seven years. Since September 2010, the key interest rate (overnight rate) was 0.5%. In mid 2017, inflation remained below the Bank's 2% target, (at 1.6%)<ref>{{Cite news|date=July 12, 2017|title=The Bank of Canada Shows It's the Federal Reserve of the North|newspaper=Bloomberg.com|url=https://www.bloomberg.com/news/articles/2017-07-12/the-bank-of-canada-shows-it-s-the-federal-reserve-of-the-north}}</ref> mostly because of reductions in the cost of energy, food and automobiles; as well, the economy was in a continuing spurt with a predicted GDP growth of 2.8 percent by year end.<ref>{{Cite news|date=July 12, 2017|title=Bank of Canada Raises Rates for First Time in 7 Years|newspaper=Bloomberg.com|url=https://www.bloomberg.com/news/articles/2017-07-12/bank-of-canada-raises-benchmark-rate-to-0-75-key-takeaways}}</ref><ref>{{Cite news | url=https://www.theglobeandmail.com/report-on-business/economy/bank-of-canada-interest-rate-decision/article35662991/ |title = Bank of Canada raises interest rates for first time in seven years}}</ref> Early on July 12, 2017, the bank issued a statement that the benchmark rate would be increased to 0.75%.

Following the COVID-19 pandemic, critics have pointed out that the Bank of Canada's inflation-targeting has had unintended consequences, such as fuelling an increase in home prices and contributing to wealth inequalities by supporting higher equity values.<ref>{{Cite web |title=GESSAROLI: Artificially low interest rates – we're paying the price |url=https://torontosun.com/opinion/columnists/gessaroli-artificially-low-interest-rates-were-paying-the-price |access-date=2022-04-01 |website=torontosun |language=en-CA}}</ref>