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
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.