% annual growth rate:
Sources: M3 from OECD database and nominal GDP from IMF database, as at February 2022.
The medium-term relationship between money and nominal GDP growth in Canada, 1971-2020
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 steady 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 - did result in asset price inflation, both in residential property and stock markets. However, in the aftermath of the Great Recession, Canada returned to stable rates of money and output growth far quicker than most other developed economies. 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.