Inflation at target? Not my problem

Well this is a bit awkward.  Just as our hero told us he was putting on his cape and was going to save the world, or at least Canada, by allowing the economy to run hot to encourage greater employment inclusion, he got news that inflation is already at target.   Headline is running the fastest it has since 2014 and even the three amigos, the three measures of core are averaging  2%, right at target.   With other gauges apart from employment participation showing that the economy is operating at full capacity, how’s our super hero going to continue his stimulative monetary stance for the benefit of all? 

He’ll do what every central banker does.  The Bank will focus on things that can justify the course that they want to take.  Don’t worry youth of the country, he will get you out of the basement.   Heck, it is apparent after the Governor’s last speech that he has already changed the Bank’s mandate by emphasizing employment over inflation.  It doesn’t sound like inflation running just above target is going to deter him from wanting to take us to a higher economic equilibrium.  His only problem is he has to justify it within the confines of the mandate that he signed on to with the government.  What to do, what to do?

I suspect the Bank will keep rates unchanged for a lot longer than would typically be the case with inflation at target and the economy at full capacity.  Pretending to adhere to the inflation targeting regime, communications will emphasize the slowing growth from measures previously taken and the continued uncertainty around trade.  They may have to move off of Nafta developments as that news risks getting better, but they can quickly shift, and rightfully so, to what is going on between Donny and Xi.  Add in the usual blah blah about Phillips curve flatness, competitive hurdles, expansion of potential through the push of demand on capacity constraints and you have a Bank that can continue to keep policy quite stimulative. 

Unless there is an unlikely uprising from any hawks in his posse that can change the Governor’s mind in their “decision-by-consensus” process, the foot will remain steady on the accelerator.