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The goal of
Canadian monetary policy is to contribute to rising living standards
for all Canadians through low and stable inflation. Specifically,
the Bank aims to keep the rate of inflation, as measured by the
annual rate of increase in the consumer price index, inside a target
range established jointly with the government. Since 1995, the target
range has been 1 to 3 per cent.
The Bank implements
monetary policy through its influence on short-term interest rates
and thereby on monetary conditions. The concept of monetary conditions
incorporates the effect on the economy of both short-term interest
rates and the exchange rate for the Canadian dollar. Changes in
monetary conditions affect inflation only indirectly and are usually
felt over a period of 18 months to two years. |
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transmission of monetary policy mechanism, transmission mechanism, transmission
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