But I do not want to leave you with the impression that foreign exchange markets always know the appropriate value for a currency. They sometimes push too far once a trend is established in one direction or another. Indeed, I believe that during this latest episode of global financial turbulence, markets exaggerated the commodity connection of the Canadian dollar.
By announcing the inflation target to the public, the central bank commits itself to its achievement. 2  BIS Review 88/2006  Uncertainty over future inflation will ease because public inflation expectations have a point of reference, and thus economic costs arising from uncertainty will also be reduced.