% annual growth rate:

M3Nominal GDP
1971- 20188.97%6.94%
Eight years to 2018 7.01%3.66%

Sources: M3 from OECD database and nominal GDP from IMF database, as at May 2019.

The medium-term relationship between money and nominal GDP growth in Canada, 1971-2018

Five-year moving averages of annual % changes, with 1973 being the start of the first five-year period

Comment on monetary trends in Canada

With the exception of the oil crisis of the 1970s, Canada has maintained relatively stable and moderate rates of growth of broad money compatible with low inflation and stable economic growth for several decades. In the years running up to the Global Financial Crisis, excessive broad money growth  – 10.2% annual growth in 2004, 9.86% in 2006 and 12.1% in 2007 – led to asset price inflation, both in residential property and stock markets. However, compared to other developed economies, Canada returned far sooner to stable rates of growth of money and output growth following the Great Recession. The steady rate of growth of M3 at an average of 7% since 2010 has been accompanied by a sustained annual rate of growth of the economy around 4%, and quite stable inflation within the inflation target range of 1-3% (but ideally 2%) followed by the Bank of Canada.