the crisis, inflation targeting delivered on its promise". In an article written since the COVID-19 pandemic, critics have pointed out that the Bank of Canada’s inflation-targeting has had unintended consequences, with persistently low interest rates over the last 12 years fuelling an increase in home prices by encouraging borrowing; and contributing to wealth inequalities by supporting higher equity values. Choosing a positive, zero, or negative inflation target Choosing a positive inflation target has at least two drawbacks. Over time, the compounded effect of small annual price increases will significantly reduce a currency's purchasing power. (For example, successfully hitting a target of +2% each year for 40 years would cause the price of a $100 basket of goods to rise to $220.80.) This drawback would be minimized or reversed by choosing a zero inflation target or a negative target. Vendors must expend resources more frequently to reprice their goods and services. This drawback would be minimized by choosing a zero inflation target. However, policymakers feel the drawbacks are outweighed by the fact that a positive inflation target reduces the chance of an economy falling into a period of deflation. Some economists argue that fear of deflation is unfounded, citing studies that show inflation is more likely than deflation to cause an economic contraction. Andrew Atkeson and Patrick J. Kehoe wrote, According to standard economic theory, deflation is the necessary consequence of optimal monetary policy. In 1969, Milton Friedman argued that under the optimal policy, the nominal interest rate should be zero and the price level should fall steadily at the real rate of interest. Since then, Friedman’s argument has been confirmed in a formal setting. (See, for example, V. V. Chari, Lawrence Christiano, and Patrick Kehoe 1996 and Harold Cole and Narayana Kocherlakota 1998.) Effectively, Friedman was arguing for a negative (moderately deflationary) inflation target. Variations Contrast to the usual inflation rate targeting, Laurence M. Ball proposed targeting on long-run inflation, targeting which takes the exchange rate into account and monetary conditions index targeting. In his proposal, the monetary conditions index is a weighted average of the interest rate and exchange rate. It will be easy to put many other things into this monetary conditions index. In the "constrained discretion" framework, inflation targeting combines two contradicting monetary policies—a rule-based approach and a discretionary approach—as a precise numerical target is given for inflation in the medium term and a response to economic