Optimal price level targeting and near-zero interest rates are analysed in the summer edition of the Bank of Canada Review, published on 19 August.

Stephen Murchison shows that it optimal for central banks to target inflationary expectations in response to external shocks. In an article entitled 'Price level targeting and relating price shocks,' he demonstrates that a central bank may minimise the societal loss-function by clearly committing to price-level goals, even if they create larger