Quote:
Originally Posted by Lurch
You fundamentally misstate the BOC's mandate with this paragraph. The only thing the BOC is mandated to care about is core inflation, which it targets at 2%. If inflation is higher nationally, it raises interest rates. Vice versa if lower. To the extent that Alberta impacts national inflation, we influence interest rates. The BOC is specifically not using exchange rate targets as it is a fundamental economic principle that you can influence inflation OR exchange rates with monetary policy, but not both.
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You are correct. However, so am I. The BoC is simply allowing Alberta to inflate past their acceptable targets in order to influence exchange rates to stimulate other regions.
I don't really consider it good policy per se, but the BoC has done worse things before, so it's not really all that surprising.