ANALYSIS | The Bank of Canada is warning Canadians to brace for a rough winter | CBC News: Canadian consumers aren’t the only ones who are frustrated. Economist Jim Stanford from the Canadian Centre for Policy Alternatives says the central bank has pushed rates too high, too quickly. Central banks around the world are looking at the current state of inflation, he said, and assuming both the cause and the solution are the same as the last inflation crisis in the 1970s and 80s.
“Policymakers at the Bank of Canada and the government and academia, I
think, are unduly obsessed with what happened in the 1970s. It’s like a
nightmare,” Stanford said in an interview with CBC News.
In the
1970s, real wages were rising along with prices. This time, real wages
have fallen. In the 1970s, corporate profits were falling. Right now,
corporate profits have surged to record levels.
“So this is the
exact opposite of what we experienced in the 1970s. And pulling out a
50-year-old recipe and applying it again to today’s situation is
absolutely inappropriate,” Stanford said.
He says the central bank should pause its relentless rate hikes and see if inflation really does need more of a push.
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