The Canadian Monetary Policy
The ultimate aim of Canadian monetary policy is to help our economy achieve its maximum sustainable growth, and thus contribute to rising living standards for Canadians. The best way for the Bank of Canada to achieve this objective, is by working toward a specific, concrete goal—that of keeping inflation low, stable, and predictable.
Inflation control contributes to better economic performance in many ways. First, low and stable inflation allows people to read price signals clearly, which in turn help both individuals and companies to make sound, long-term economic decisions. So that's one advantage of inflation control—greater certainty about the future value of money.
Keeping inflation low and stable gives people confidence—confidence in the future value of their money, confidence in their financial decisions, and confidence in the ability of the economy to withstand shocks and grow in a sustainable fashion.
Interest rates are important to all Canadians. And, with inflation being low and stable, both short- and long-term interest rates have been lower and less volatile than in the past. As a result, borrowing and investment decisions can now be made with greater certainty. And interestingly, in contrast to what might have been deemed possible just a decade ago, interest rates in Canada are currently lower—and long-term rates have become more stable—than they are in the United States.
The good news is, this trend is predicted to continue into late 2008, so the time is great to get out of the rental or move into your dream home, mortgage money is inexpensive and house prices are continuing to exceed the rate of inflation.
Chuck Barrington
Bank of Montreal
Mortgage Specialist
Phone: 902-452-1374
chuck.barrington@bmo.com