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But things are different this time around. For one thing, the Bank of Canada has not had the sort of success in controlling inflation that it has enjoyed in previous mandates. For another, inflation targeting no longer enjoys the broad support it once had among policy analysts. Many have argued, both within and outside the bank, that instead of targeting the rate of growth of the CPI (i.e., the rate of inflation), the bank should target its level, so that past deviations from the target would be corrected, instead of forgotten. Others have argued that the bank should target nominal GDP instead of the price level. One of the advantages of targeting a level instead of a growth rate is that it obliges the bank to act more aggressively, making recessions less severe. There is a real debate to be had here.

Each November, the Bank of Canada holds a private, invitation-only conference, and last November’s theme was the renewal of the bank’s mandate. I was glad to be invited, because I thought I was going to see some of these arguments thrashed out. I quickly learned that the level targeting option was not going to be discussed at the conference, and the only explanation I got was from a bank official that I managed to buttonhole by the coffee station.

I wish I could tell you what he said, or what the other people at the conference said, but I can’t. I offered to write about the discussion using Chatham House rules (repeating what was said, but without identifying the speakers), but even that was considered to be too much of a breach of confidentiality. I’m pretty sure that level targeting will not be adopted in the next Bank of Canada mandate, but we’ll never know the story of how or why that decision was made.

As things stand now, the fundamental goals of Canada’s monetary policy are set behind multiple layers of secrecy and then rubber-stamped at the last minute. After the events in the U.K. last week, I’m worried about the long-term sustainability of this sort of arrangement.

National Post

Stephen Gordon is a professor of economics at Université Laval.