If the Canadian economy is operating close to capacity (i.e., near full employment) and inflation is close to or at the 2 per cent target, interest rates have to be close to their “normal” or “neutral” levels. Not true. If there were no forces acting on the economy to push it away from this desired state, the statement would be true.
This has led some to confuse the effects of globalisation with those associated with the introduction of the euro. For instance, perceived inflation is in some countries higher than measured inflation, and some attribute this effect to the euro, even though over six years have passed since the introduction of the euro banknotes and coins.