I dislike the current practice of using ONLY interest rates to target ONLY inflation. Other places include employment levels as part of their interest rate calculation. There are other tools for price stability, but they've all been tossed out by neoliberalism, the extreme form of capitalism currently practiced.
That's led to the current mess, where capital returns are too high, and labour share is too low.
Know what else checks economic growth and inflation? Business and capital gains tax increases!
Oct 29, 2026, 6:48 PM@johnefrancis The issue I have with the rate hike is that inflation, as you say, is being driven by energy profiteering through supply shortages caused by the US's war of choice.
The classic inflation scenario is when people have too much money and they're buying too much, outpacing supply. This can be addressed with rate hikes, to curb consumer spending.
Our current situation is a supply side disruption at a time when most households are already falling into poverty. A rate hike does nothing but cause additional hardship on people.
@zazzoo @johnefrancis Monetary policy expressed as inflation targets by central banks is a central pillar of the neoliberal command economy. The acceleration of inequality is a feature, not a bug.
@johnefrancis (capital /rent/ returns are too high and this starves actual capital productivity investment, but what productivity gains are made are still captured almost exclusively by capital)
@johnefrancis In the past, currencies were fixed and interest rates influenced by government. Failure to act to curb inflation lead to runaway inflation such as in the 1970s. In 1980, Bank of Canada got totally independent setting of rates. (so politicians could no longer be blamed for high interest rates).
Currencies were also made free floating to adapt to balance of payments.
Bank of .CA doesn't just look at inflation sats. They also look at value of CAD and many other metrics.
@jfmezei sure, they look at lots of stuff for forecasting purposes. But their monetary policy mandate is ONLY inflation control...unlike the US fed, they don't have discretion to say "sure, inflation is a bit higher than our 1-3% target, but unemployment is very high, so we will not raise rates to target inflation until unemployment is close to our mandated unemployment target"
IMO, the BoC does a very good job following its orders from the govt, it just has the wrong orders.
@johnefrancis I think BoC has a lot of wiggle room in how it interprets the economy. But there are limits. They can tolerate a bit of inflation if raising rates would hurt employment tio much but there are limits. And the inflation caused by Trunp is way above thise limits.
@johnefrancis When you look at the 1970s, guess what triggered it? The oil crisis with rising price of oil. So Bank of Canada and other central banks are wise to nip this in the bud before it becomes runaway inflation.
Yes, it slows the economy down, but not as bad as runaway inflation.