Monetary Policy

Inflation-control targeting has been a cornerstone of monetary policy in Canada since its introduction in 1991. At present the target range is 1 to 3 per cent, with the Bank's monetary policy aimed at keeping inflation at the 2 per cent target midpoint.

The inflation-control target has helped to make the Bank's monetary policy actions more readily understandable to financial markets and the public. The target also provides a clear measure of the effectiveness of monetary policy. One of the most important benefits of a clear inflation target is its role in anchoring expectations of future inflation. This, in turn, leads to the kind of economic decision making — by individuals, businesses, and governments — that brings about non-inflationary growth in the economy.

Background information:

• Inflation-Control Target: Definitions and Notes
• Fact Sheets:
  • Inflation-Control Target
  • Benefits of Low Inflation
  • Inflation and Price Stability

Agreement on the inflation-control target:

• Joint statement of the Government of Canada and the Bank of Canada on the renewal of the inflation-control target (23 November 2006)
• Press release on the renewal of the inflation-control target
• Renewal of the Inflation-Control Target: Background Information