OTTAWA - A new study says the Bank of Canada's fixation on inflation to the exclusion of other aspects of the economy poses a risk to the recovery.
Economists Arthur Donner and Doug Peters say the central bank should take a wider view of the economy and also seek to maximize employment and growth.
The paper was written for the Canadian Centre for Policy Alternatives and comes on a day that U.S. President Barack Obama warned Wall Street financiers that they must learn the lessons of the recession, or risk repeating it.
Donner and Peters, a former Liberal junior finance minister, say the tight focus on inflation has blinded the bank in the past to dangers like asset bubbles.
More worrying, they say, it could result in the bank pulling back from its stimulus stance too early in fear of a return to inflation. Coincidentally, Bank of Canada governor Mark Carney also recently mused that the institution's mandate may need to be broadened to avert future crises.
