It might be difficult to imagine now, but back in the 1980s, interest rates on mortgages topped 20 per cent. That, of course, was before we signed a pioneering inflation-control agreement with the federal government in 1991. Canada was the second country in the world – after New Zealand – to adopt an inflationtargeting regime.
It is not often you can say that a product worked better than advertised. Inflation targeting has. It has easily exceeded our expectations. Since 1991, inflation in Canada, as measured by the consumer price index (CPI), has averaged 2 per cent, and its variability has fallen by roughly two-thirds. Canadians have benefited in a number of important ways.