This morning I will offer some comments on this ongoing debate. In part, these remarks will give my perspective on some of the familiar points of contention, such as the relative priority and role of nonmonetary, compared with monetary, policy instruments in responding to risks to financial stability.
But by the early 1990s, the Bank decided to achieve price stability by directly targeting inflation. A formal agreement between the Bank and the federal government set out the goals for reducing inflation to 2 per cent by 1995. And that inflation-targeting system worked so well that it has been renewed four times, most recently, near the end of last year.