Under the Microscope

Targeting inflation

Low and stable inflation means that prices rise slowly and predictably. This makes it easier for people and businesses to plan ahead. And it means that, over time, our money holds its value better.

Since the early 1990s, the Bank of Canada has adjusted interest rates to keep inflation around 2 percent. We call this inflation targeting, and its one of the most popular monetary policy frameworks in the world. Every five years, we work with the federal government to review whether:

  • inflation targeting is still the best approach, or
  • we can make any improvements.

We’re reviewing the agreement now. In 2021, we’ll sign a new agreement.

News – Bank of Canada