Canada used discretion, monetary targets and more discretion before a growing focus on price stability led to the introduction of inflation targeting in 1992.
|Years||Targets and attainment||Classification|
|1974-5||exchange rate floating, no formal targets; monetary policy operated primarily through short term interest rates||loosely structured discretion LSD|
|1976-80||wide declining monetary targets (first announced late 1975, with specified base period but open term) met; exchange rate floating but some smoothing intervention||loose converging monetary targets LCMT|
|1981-91||monetary targets undershot then abandoned; exchange rate floating but some smoothing; monetary policy considers range of indicators, notably exchange rate vs USD; ‘search for a new nominal anchor’ (Thissen, 2000); growing emphasis on price stability||loosely structured discretion LSD|
|1992-2014||inflation targets (first announced early 1991) declining 1992-3, met; then targets constant at 1-3%, met or near-met; initially policymakers use monetary conditions index (MCI, which incorporates exchange rate as well as interest rates) to measure monetary stance, but MCI downgraded from late 1990s; refinements of inflation targeting but basic framework regularly renewed||full inflation targeting FIT|
Selected IMF references: RED Feb 1977 pp32-4; RED Dec 1977 pp37-40; RED 1978 pp39-41; RED 1980 pp40-1; RED 1983 pp37-9; RED 1984 pp35-7; RED 1988 pp32-4; RED 1991 p34; RED 1992 p26; EDP 1995 pp37-8; SI 1997 ch. VI; SR Dec 1998 pp10, 14-15; SR 1999 pp15-19; SR 2002 pp16-17; SR 2011 pp9-10.
Additional source: Thissen (2000).
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