The successful implementation of a monetary policy aimed at low, stable, and predictable inflation and a fiscal policy aimed, in most circumstances, at running a small surplus with the goal of bringing about a significant decline in the debt-to-GDP ratio has enhanced the credibility of both policies.
The major lesson that we at the Bank of Canada draw from our experience with inflation control is related to the advantages of establishing a credible anchor for monetary policy by focusing on the predictability of inflation. That will be the theme of the rest of my talk.