Dr. David Dodge

By Aimee Sheppard
Last Thursday about 150 people gathered in Marine Institute's Hampton Hall to hear Dr. David Dodge, governor of the Bank of Canada, discuss the country's economy. His lecture, titled Low, Stable, and Predictable Inflation and the Performance Of Canadian Labour Markets, explained how maintaining a steady rate of inflation is important to wage setting and a stable economy.

In the 1970s, inflation rates in Canada were unstable and ranged from three to 12 per cent. In recent years, the Bank of Canada has been able to limit inflation rate increases to two per cent annually. Dr. Dodge credited the tight monetary and fiscal policies of the early ‘90s with contributing to the country's current positive economic environment.

He concluded that anchoring inflation expectations has reduced uncertainty about future inflation and has helped Canadian businesses and workers make better planning decisions. This predictability has led to more efficient wage-bargaining and a more productive allocation of resources in the economy.

“Wage bargaining can be concluded by focussing on factors that are relevant to wage setting, such as productivity growth,” he said.

The low, stable rate of inflation also benefits people planning for retirements and investment portfolios.

After his lecture, Dr. Dodge answered questions from eager audience members about interest rates, pension indexes, globalization, and more. He also suggested that the rising Canadian dollar could lead to lower interest rates as the Bank of Canada looks to stimulate growth domestically.