There is no doubt that the predictability and certainty that come from inflation targeting helped Canada’s economy respond as quickly as it has to the oil price shock. The response demonstrated our economic resilience and flexibility, certainly when compared with shocks of past decades. I do not mean to dismiss how difficult it has been for many individuals.
But at the aggregate level, the economy has shown its ability to adapt quickly. Other structural factors, such as Canada’s relatively flexible labour market, have also contributed. Mexico’s inflation-targeting framework helped make its economy relatively resilient to the shock as well.