From the Canadian Experiment of the 1990's: A New Consensus on Monetary Policy

International audienceBy analyzing the documents issued by the Bank of Canada, a new, original, monetary policy begins to emerge. The Canadian monetary policy tries to maintain its autonomy, while at the same time respecting floating exchange rates. The numerous innovations are the foundations of a New Consensus on monetary policy. Far from the dilemma of rule versus discretion of the former Monetarist and Keynesian methods, a new dilemma will be the focal point, that of credibility versus confidence. Here, the anticipations of the economic agents, the behavior of financial markets and the price of assets play a dominant role. Based on the innovative experiment of the Bank of Canada during the 1990s, the characteristics of the New Consensus is explained. Far from making independent central banks some high-powered institutions, it shows them instead to be "statues with feet of clay"