As we go through the normalization process, this represents the natural reaction of financial markets to economic uncertainty and a return to a normal trading environment – not an erosion of central bank credibility. The Bank of Canada will continue to pursue and fulfill our inflation-targeting mandate.
However, the current policy mix, focused on closing the remaining fiscal gap and ensuring the sustainability of the social security system, must become more growth-friendly. In other words, the emphasis should be on reducing non-investment government expenditure and raising productivity.