OECD urges Bank of Canada to keep removing monetary stimulus
Thursday, October 28, 2004 3:15:06 PM
afxpress.com
BRUSSELS (AFX) - The OECD said the Bank of Canada should keep removing monetary stimulus to prevent a pick-up in inflation
In its report on the Canadian economy, the OECD said that after a weak performance in 2003, activity was again buoyant
The OECD noted that the Canadian economy was now forecast to grow by around 3 pct this year and 3.5 pct in 2005, above its previous projections
"At this pace... the Bank of Canada will need to continue removing monetary stiumulus so as to avoid inflation picking up," it said
Last week, the central bank raised its key overnight rate to 2.5 per cent, the second increase in as many months
The OECD said Canada's macoreconomic policy mix is appropriate for this point in the economic cycle, but warned that a neutral fiscal stance must be maintained
On the exchange rate, it said the best response to the appreciation of the Canadian dollar is for policy-makers to step up efforts to boost productivity and innovation
[Policy makers to boost productivity and innovation - LMAO - Mish - well I suppose they could fire more govt workers, that might help]
The OECD called on the government to ensure public finances remained sustainable in the long term, given the looming challenge of the ageing population
It also said the government should strengthen its competition law to allow for, amongst other things, the ready prosecution of hard-core cartels
The government should beef up the law's civil provisions by authorising monetary penalites for abuse of dominance and other violations, it said
The OECD said that to dispel "lingering misconceptions" about the independence of Canada's Competition Bureau, the government should keep presenting its budget as a separate item within the annual estimates |
