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-Economists ask Bank of Canada to lower inflation target.

Global Banking News-January 28, 2011--Economists ask Bank of Canada to lower inflation target(C)2011 ENPublishing -

Global Banking News - 28 January 2011

Economists have urged Bank of Canada to lower its inflation target.

Angelo Melino, a professor at the University of Toronto, said that the central bank needs to revise its inflation target to below its two per cent to 1.5 per cent. He said that a later revision could take it to one per cent. Melino acknowledged that the current target has been good for the economy, and added that reducing it further would do more good for the economy.

In a statement, he said, 'There's nothing magical about two per cent. We all see that having inflation at 10 per cent is lousy and at five per cent is also lousy, so the direction to lower inflation is the way we should go.'

Talks about revising the inflation target have assumed significance as the central bank is contemplating its moves since an agreement that it had signed with the government on inflation is coming to an end. The deal that was originally signed in 1991 and renewed in 2006 seeks to limit inflation to within one and three per cent.

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Date:Jan 28, 2011
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