The Government of Canada and the Bank of Canada have renewed the Bank’s monetary policy framework for a further five years, the two sides said in a joint statement issued in Ottawa. The new agreement keeps the inflation target at 2 percent and runs until December 31, 2031.
Target stays unchanged
Under the renewed framework, the Bank will continue to aim for 2 percent inflation, the midpoint of a control range running from 1 percent to 3 percent, measured by the 12-month change in the consumer price index. The statement said the Bank would conduct policy symmetrically, using the framework’s flexibility to respond to shocks while still steering inflation back to target over time.
Canada and the Bank jointly review and renew this framework every five years. Once renewed, the Bank goes on to conduct monetary policy on its own. The statement noted that inflation has returned to the 2 percent target and to the 1 to 3 percent range, after the Bank acted forcefully to bring it down following the shocks of the pandemic period.
Supply shocks in focus
No further detail on that work was given.
The renewal does not change the target itself, only its duration. The new term extends the existing goal through the end of 2031.
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Source: Bank of Canada
