Don't Ignore Lessons from Canada's Inflation-Fighting Past in Shaping
Monetary Policy: John Crow

TORONTO , Nov. 5 /CNW/ - Canada's difficult experience with inflation in the past offers timely lessons for shaping current and future monetary policy, according John Crow , former Bank of Canada Governor. In a study released today by the C.D. Howe Institute, Canada's Difficult Experience in Reducing Inflation: Cautionary Lessons, Mr. Crow offers an insider's perspective on the fight against soaring inflation in the 1970s through to the successful introduction of inflation targeting in the early 1990s, and draws general lessons from the historical record. Examples of those lessons include:

    
    -   While the Canadian economy is relatively small and very open,
        home-grown monetary policy has generated a decent domestic inflation
        performance since the early 1990s. External conditions can and do
        matter, but the evidence shows that they are not decisive.

    -   Canadian experience supports the maxim that "inflation is always and
        everywhere a monetary phenomenon." No policy regime aimed at reducing
        or preventing inflation can be fully effective unless the central
        bank takes a prominent role, or better still the lead. Relying on the
        general government to take the lead in inflation control, whether by
        way of fiscal policy or income controls, or through executive
        direction in monetary policy, will not work.
    

For the study go to: http://www.cdhowe.org/pdf/commentary_299.pdf

For further information: John Crow, Former Governor, Bank of Canada, Senior Fellow, C.D. Howe Institute, [phone]