Our decisions also reflected the desire of the Governing Council to retain the ability to react to potential future shocks to ensure the sustained convergence of inflation to our medium-term aim. They embed precise elements of state contingency into our forward guidance. By clearly specifying and communicating our reaction function, we are able to act in a consistent and predictable fashion.
But from a macroeconomic point of view, adjustment can take place with less social and economic cost overall when inflation expectations are well anchored, the economy is operating close to its potential, and a floating exchange rate is helping to absorb external shocks. International adjustments That’s a quick look at how the Canadian economy is adjusting to global forces.