Canada Responsible for Own Economic Growth

Canada has weathered the global financial crisis well because of its inflation policies, a resilient financial system, and timely fiscal stimulus.

But the Bank of Canada faces two major challenges according to a speech by John Murray, Deputy Governor of the Bank of Canada (the Bank) to the Victoria Chapter of the Certified Management Accountants, the Certified General Accountants, and the Financial Management Institute on March 6.

The first challenge is inflation, which is weak across all of the advanced economies said Murray, who also stressed the importance of returning to the two per cent target jointly adopted by the Bank and the Government of Canada. Inflation in advanced economies depends heavily on highly volatile food and energy prices.   

The second challenge is unbalanced economic growth. To be sustainable, the sources of growth must be well balanced in business and export sectors. Rather, Murray noted that Canada’s growth has relied too heavily on increases in household spending, and rapidly increasing household debt.

Stressing the importance of domestic rather than international factors, Murray noted “the international perspective simply allows us to conduct our affairs in a more informed way, and improves the odds of a favourable outcome.”