Bank of Canada deputy governor Paul Beaudry said in hindsight, governments and central banks should have withdrawn stimulus measures earlier as economies recovered from the COVID-19 pandemic, which likely would have kept a lid on inflation.
deputy governor Paul Beaudry said in hindsight, governments and central banks should have withdrawn stimulus measures earlier as economies recovered from the COVID-19 pandemic, which likely would have kept a lid on inflation.
One of the lessons from the global financial crisis in 2008-2009, he said, was that countries would have benefited from a more gradual withdrawal of stimulus because of spillover effects. The deputy governor said the stimulus delivered simultaneously by countries through government support programs and lower interest rates had spillover effects globally and contributed to supply chain bottlenecks.
Central banks generally worry when people and businesses expect inflation to remain high because those expectations can feed into even higher prices.
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