Moreover, in 1994 and early 1995, investor nervousness about our fiscal and political situations led to temporary sharp increases in domestic interest rates in the wake of turbulent global financial markets. All of this left Canadians anxious about the future and cautious about spending.
In these circumstances, is it any wonder that the benefits of low inflation have been slow to materialize, and the recovery from the recession of the early 1990s has been more gradual than expected? There is no getting around the short-run costs to Canadians of these difficult, yet absolutely necessary, structural adjustments.