Without last year’s interest rate cuts, it would have taken much longer to have inflation return to target. While the April projection was being developed, the Canadian economy appeared to be doing better than previously expected.
Moreover, the use of the trigger solution would reduce the risks of fragmentation of the liquidity needed on the ‘cash-side’ of the settlement systems. Other central banks have experimented with trigger solutions . More recently, at Banca d’Italia, we successfully experimented with a trigger solution centred on TIPS, the Eurosystem’s instant payments platform.