Various measures of long-term real interest rates have also remained at moderate levels over this period. These developments, however, do not warrant complacency about the fiscal outlook. With the baby boomers starting to retire in a few years and health spending continuing to soar, our budget position will almost surely deteriorate substantially in coming years if current policies remain in place.
The benefits, in terms of predictability, of having a longer agreement are self-evident. The reinforcement of the message that the Bank aims at the 2 per cent target midpoint, combined with the special attention to be given to persistent deviations from that midpoint, is meant to make it clear that we are not indifferent to the various outcomes in the target range.