The federal government has failed to take up an historic opportunity to lock in ultra-low interest rates on long-term Government of Canada bonds.

Statistics Canada reported recently that the annual inflation rate remained 2.9 per cent and the Bank of Canada's core rate remained 2.1 per cent in November.

The monthly increase in consumer prices slowed to 0.1 per cent in November from 0.3 per cent in October. The monthly increase in core prices slowed to 0.1 per cent in November from 0.2 per cent in October.

Inflation remains modest and should not deter the Bank of Canada from keeping interest rates low, and perhaps reducing them, to support our fragile economy and labour market.

The Euro deal at least averted an immediate banking crisis and induced temporary market euphoria, but it is not going to provide a lasting solution to the Euro sovereign debt crisis because it will block any lasting recovery for the European economy.

After watching Jack Layton's state funeral, I noticed that Jean-Claude Trichet's speech from Jackson Hole is online. The European Central Bank president does not seem to get it. Far from acknowledging that last month's interest-rate hike was premature, he touts "price stability."

TD Economics Monday released a rather gloomy report, putting the odds of a U.S. recession at 40 per cent, and arguing that that Canadian economy is more vulnerable to recession than it was in 2008. It highlights reduced capacity for governments to respond given that interest rates are already very low, and given that household and government debt are significantly higher than in 2008.

I would go one step further and argue that the odds of a Canadian double-dip recession are quite high. I agree with TD that our capacity to respond through easier monetary policy is weak, but would argue that we can and should respond through fiscal policy.

Less than a month ago, the C. D. Howe Institute released Michael Parkin's paper, "Overnight Moves: The Bank of Canada Should Start to Raise Interest Rates Now." The next day, its Monetary Policy Council called on the Bank to increase the overnight interest rate.

The release of today's Monetary Policy Report from the Bank of Canada follows yesterday's announcement of no change in interest rates, the latest in a long series. It reminds me of an English County cricket match in which a batsman is politely applauded -- "very well not played, sir!" -- for doing absolutely nothing other than watch a potentially dangerous pitch fly by slightly wide of the wicket.