The Government of Canada and the Bank of Canada renewed the Bank’s monetary policy framework for another five years, reaffirming that the inflation target will continue to be 2 percent, the midpoint of the 1 to 3 percent inflation-control range, measured by the 12-month change in the consumer price index. The agreement runs to December 31, 2031, and monetary policy will continue to be conducted symmetrically, with equal emphasis on deviations above and below the target.
The statement said the post-pandemic episode was not a failure of the framework’s design but a challenge to its implementation amid extraordinary global shocks, and that the Bank has strengthened its analysis of how supply-side shocks pass into Canadian inflation. It added that the Bank will keep using the framework’s flexibility to respond to shocks while maintaining a clear focus on returning inflation to target over time.