Of course, volatility may be moderate for some stretch of time – recall that in 2006 people were seeking explanations for low volatility in the forex market1 – and heightened at other times, as now. The question that I will now seek to address is: What should be our response to volatility?
It has been renewed three times— most recently for five years until the end of 2006. Today, both the Bank of Canada and the European Central Bank are working to strengthen the economies in their jurisdictions. We both want to promote stable growth and rising living standards. And, importantly, we agree that promoting low and stable inflation is the best means to those ends.