At the same time, enterprises responded to the challenges of trade liberalization by improving the quality of their products and marketing them aggressively to new North American customers. These adjustments were not easy. But they did leave Canada’s economy in a better position to handle economic shocks and, therefore, to grow on a sustained basis. Canada’s floating exchange rate helped facilitate these structural adjustments.
This development has come as a response to the financial crisis. Price stability as the macroeconomic objective continues to play an important part in central banking. Inflation targeting with a credible and independent central bank may well survive as the framework for monetary policy. However, interconnections between financial and macroeconomic stability are one topic that needs more attention in the future.