The Bank of Canada and Canadian government on Monday renewed the central bank’s inflation target, at the midpoint of a 1 to 3 percent range, for another five years, opting to bypass alternative policy goals and sticking with the status quo.
In a joint statement, they said the target of 2 percent will continue to be defined in terms of the 12-month change in the total Consumer Price Index (CPI), and the agreement to renew the inflation target will end on Dec. 31, 2021.
The renewal of the agreement, which guides the bank’s interest rate decisions, was widely expected.
However, the bank said it would change the way it measures core inflation from one measure to three measures. Previously it used the so-called CPIX measure that excludes eight of the most volatile components of the CPI and the effect of indirect tax changes on the remaining components.