The cost-benefit of lowering the target hinges on weighing these uncertain benefits against the increased probability of hitting the zero bound and the costs that this might impose, absent other reliable corrective instruments. Research on price-level targeting suggests that the gains from switching to a price-level target are probably positive and potentially larger in the presence of the zero bound.
Growth in the Canadian economy has also moderated. Buoyant growth in domestic demand, supported by high employment levels and improved terms of trade, has been substantially offset by a fall in net exports.