The latest data on unemployment and inflation and central bank determined interest rates strongly suggest there is still further room for stimulus and continued monetization of debt by the central bank in both Canada and the U.S as both economies recover from the covid induced collapse. The Wall Street Journal has noted that ten year treasury bills are attracting an interest rate of 1.47 % which to the extent they anchor consumer interest rates on mortgages, credit card and bank debt have an important role in the overall economy. This rate is far from contractionary.
The Bank of Canada for its part has continued holding the bank rate to 0.25% this is also recognition that inflation to the extent it exists is moderate, low and for the time being stable. Oil prices rose substantially over the past year from just under $40 per barrel to around 70 $ per barrel for WTI and Brent But today they weakened somewhat with WTI just under that price.
Oil prices account for close to 8 % of the GDP So the inflationary impact of the rise from 40 dollars a barrel to 70 dollars a barrel is low to moderate. With 8.2 % unemployment there is still considerable further room for expansion of the Canadian economy . The U.S. economy is somewhat tighter, unemployment Is 5.8%- but they could target lower unemployment, say setting a rate below 3 % – perhaps 2 %. The Nobel prize winning Canadian economist who taught at Columbia for many years William Vickery argued that 1 % unemployment was an excellent and achievable target.