Interest rates have also been lower in both nominal and real terms across a range of maturities. More broadly, low, stable and predictable inflation has helped to encourage more stable economic growth in Canada as well as lower and less-variable unemployment. 2.
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.