If a country chooses not to float its currency, it essentially adopts the monetary policy of the country to which it is tied. This may, or may not, provide an effective nominal anchor. Let me briefly explain how the floating exchange rate fits into Canada’s monetary framework.
At the same time, it appears that inflation and inflation expectations have eased. The core consumer price index, which excludes food and energy, edged up only 0.1 percent in each of the past three months through August.