Finally, a central lesson from past commodity booms (and busts) is the value of a flexible exchange rate as shock absorber. A floating exchange rate is a key element of our monetary policy framework that allows Canada to pursue an independent monetary policy appropriate to our own economic circumstances.
To be absolutely clear, irrespective of the path of commodity prices specifically, or global price movements more generally, a floating exchange rate means that we can continue to achieve our inflation target. Exchange rate movements act as a signal to shift resources into sectors where demand is strongest. During the Asian crisis in the late 1990s, commodity prices fell sharply.