As I have said in the past, I have a great deal of difficulty with the idea that wage earners in Canada are subject to a permanent money illusion that can, and should, be exploited by the monetary authority.24 How can monetary policy be eased when inflation is very low and interest rates are close to zero?
One of the criticisms of the goal of price stability, or a very low inflation rate, is that it rules out using negative real interest rates (i.e. interest rates lower than the rate of inflation) to provide stimulus to the economy should this become necessary.