For John Crow, Zero Inflation Is No. 1 Goal
OTTAWA -- Bank of Canada Governor John Crow is using his own "made-in-Canada" policy to deal with inflation: He wants none of it regardless of what happens south of the border.</br></br>So when the U.S. prime rate fell last week, it was no surprise that the Canadian rate remained at a lofty 13.5% to keep inflation at bay.</br></br>"There is no God-given reason or law why we have to have inflation," says Mr. Crow, an extremely guarded man who watches his words closely even for a central banker. "I believe the underlying objective of monetary policy should be to provide currency that Canadians can have full confidence in. That means preserving the value of money. That means price stability. That means zero inflation."</br></br>That also means conflict. Mr. Crow's uncompromising stand against inflation has pushed real Canadian interest rates to near record highs, bringing the central banker into conflict with politicians, economists, businessmen and almost everyone who owes money and must pay interest.</br></br>Zero inflation "isn't an achievable goal," argues Don Blenkarn, chairman of the House of Commons finance committee. Trying to reach it would impose "horrendous" costs on the economy by stifling investment and expansion.