Canada’s aging population has reduced the effectiveness of monetary policy, says a new report by the C.D. Howe Institute.

The report, Faulty Transmissions: How Demographics Affect Monetary Policy in Canada, used inflation and unemployment rates to study the impact of demographics on the effectiveness of Canada’s monetary policy from 1992 to 2015.

The report’s authors, Steve Ambler and Jeremy Kronick, found that in this time period, Canada’s inflation rate was an average 1.5%—below the Bank of Canada’s target of 2% despite low interest rates and stimulative monetary policy.

“Canada’s aging population is likely a leading cause of the systematic undershooting of inflation we have seen since the financial crisis,” said Ambler in a press release. “Specifically, an aging population that takes on less debt is less sensitive to changes in the interest rate.”

Read: Inflation surpasses BOC’s target. Now what?

The study explains that younger adults accumulate more household debt and pay off the debt as they age. Adults then become creditors later in life. Younger adults are therefore more sensitive to changes in interest rates.

Ambler and Kronick found lower interest rates increase household spending and therefore inflation. The increases are smaller, though, when households are carrying less debt. The study found that Canada’s aging population reduced the effectiveness of monetary policy through its impact on spending.

“Credit plays an important role on the real economy—it magnifies the reduction in the effectiveness of monetary policy that comes from an aging population,” said Kronick in the press release. “Because of population aging, lower interest rates have not generated the typical increase in spending, leading to subdued inflation and lower economic growth.”

The study’s results found that Canada’s policy framework for targeting inflation is good, but not perfect. Changes to the Bank of Canada’s overnight lending rate will be needed to meet the Bank of Canada’s inflation target. Unconventional monetary policy may also be necessary if expansionary monetary policy is more difficult to achieve because of a lower neutral rate of interest.

Read the full report here.

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