Paul Beaudry: Monetary policy and financial vulnerabilities

Remarks by Mr Paul Beaudry, Deputy Governor of the Bank of Canada, at Laval University, Quebec City, Quebec, 30 January 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

It gives me great pleasure to be at Laval University today to talk to you about monetary policy. I am from the Quebec City area, and I studied in the economics department here at Laval in the early 1980s. I know several of you well, and I am very happy to see you again. Being here in January brings back many memories. When I was a student, the economics department was at the Pavillon De Koninck. I had an apartment at the corner of Chemin Ste-Foy and Du Vallon. To get to classes I had to cross a large field that has now almost disappeared. In January, with temperatures at 20 below and the wind blasting across the field, I felt like I was in a film in Siberia. I really had to like economics to motivate myself to attend classes in the middle of winter! But the quality of the education offered here pushed me to make it to every class.

Apart from the cold, when I think about my time at Laval-and at CEGEP de Ste-Foy near here-I am struck by how different things were then in terms of inflation and interest rates. In the late 1970s and early 1980s, inflation was very high and variable. That created a lot of frustration. The Bank of Canada, like many other central banks, responded by raising interest rates.