I’ll explain how high inflation in Canada largely took root due to global factors that pushed up prices for many commodities and other goods. Then I’ll talk about how inflationary pressures spread in Canada because of strong domestic demand, in other words, an overheating economy. This is what we’ve been addressing with higher interest rates.
Managers of individual funds have a mandate to act in the best interests of their own investors and may not be in a position to act in the interest of financial stability. Supervisors of individual funds may not have the information or means necessary to properly assess different funds’ contribution to systemic risk.