Price stability depends not only on monetary operational procedures, but also on stability in the financial sector or the degree of confidence in the ability of financial institutions and markets to meet contractual obligations without interruption or outside assistance. Any signs of weakness in the financial system could disrupt price stability.
We knew this would hit the economy hard, leading to cuts in investment spending and layoffs. We needed to respond to prevent inflation from undershooting the target, so we cut interest rates twice, starting in early 2015. The combination of lower oil prices and lower interest rates caused a significant decline in the Canadian dollar, and this pushed up prices of imported goods.