I am still impressed by Bank of Canada's seemingly willingness to fight "bubbles" rather than the ghosts of inflation and induced by the non-existent Phillips curve.
Here below is three interesting charts from Nordea FICC's Andreas Wallström and Mikael Sarwe.
Mikaels' chart point out how often a small open economy will lead bigger zones – Small open means more exposed… and Andreas' charts point out how Canada, which with all due respect is still an small open economy follows some track on policy (almost) but certainly in housing..
Bigger point:
Best of cyclical aspect is past use – the central bank with flexibility will change away from dogmatic Phillips curve watching to fighting bubbles…. A true countercyclical monetary policy which if follow through will mean lower equity and housing prices, higher policy rates, but also improved price discovery and balance of the economy.
Med venlig hilsen | Best regards
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