Advanced Banking Case Study, HSBC 2012

Advanced Banking Case Study, HSBC 2012 - Bank of Canada...

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Bank of Canada Inflation targeting The Bank of Canada, a federal crown corporation, has the responsibility of Canada's monetary system. During the period that John Crow was Governor of the Bank of Canada— 1987 to 1994— there was a worldwide recession and the bank rate rose to around 14% and unemployment topped 11%.[39] In 1991, with Prime Minister Brian Mulroney in office, the federal government and the Bank of Canada announced a new inflation targeting monetary policy that has been the cornerstone of Canada's monetary and fiscal policy ever since.[40] [41] Although since that time inflation-targeting has been adopted by "most advanced-world central banks",[42] in 1991 it was innovative and Canada was an early adopter when the then-Finance Minister Michael Wilson approved the Bank of Canada's first inflation-targeting in the 1991 federal budget.[42] The inflation target was set at 2 per cent, which is the midpoint of an inflation range of 1 to 3 per cent. They established a set of inflation-reduction targets in order to keep inflation "low, stable and predictable" and to foster "confidence in
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