Bank of Canada Renews Five-Year Inflation-Targeting Framework

The Bank of Canada and the Government of Canada Department of Finance agreed on Thursday to renew the central bank's inflation-targeting framework for another five years. The renewed agreement maintains the primary goal of achieving and maintaining headline inflation at 2%, utilizing the 12-month change in the consumer-price index as the primary guide for policymakers.

This updated framework differs from the 2021 agreement by omitting references to securing maximum employment. The renewal comes as the Bank of Canada recently raised its policy rate to 2.5%, driven by expectations that total inflation will remain above 3% until late next year, even as core inflation remains stable near 2%.

Governor Tiff Macklem is scheduled to provide further details regarding the framework during a speech on November 24 in Toronto.