OTTAWA—Monetary policy with zero or close-to-zero interest rates are not enough to pull the national and global economies out of the current recession, says a report released today by the Canadian Centre for Policy Alternatives.
“The overall solution to the current global economic crisis will require much more than traditional monetary stimulus,” says co-author Doug Peters, former Secretary of State (Finance) and former TD Bank Chief Economist.
“Non-traditional monetary measures such as quantitative easing, together with major fiscal stimulus, financial bailouts, and new structural initiatives to unclog banking and credit markets are necessary.”
“We are in uncharted waters. Only time will tell whether these measures will be sufficient to pull global economies out of recession,” says economic consultant Arthur Donner, co-author of the report. “However, one thing is certain: the Obama Administration’s economic recovery package is absolutely essential to success.”
“The absolute highest priority is economic recovery. Once this is accomplished, U.S. policy makers will need to have a post-recovery plan to address potential future fiscal and inflation problems,” the authors conclude.
Money, Bank Capital and Zero Interest Rates: With Central Bank Rates Approaching Zero, Can Economic Policy Be Effective? is available from the CCPA website at www.policyalternatives.ca
For more information contact Kerri-Anne Finn, CCPA Senior Communications Officer, at 613-563-1341 x306.