Bank of Canada receives renewed mandate

While we’ve included the summary bullet points below, the full details of the renwed mandate can be found at the following link https://www.bankofcanada.ca/2021/12/joint-statement-of-the-government-of-canada-and-the-bank-of-canada-on-the-renewal-of-the-monetary-policy-framework/

SUMMARY

“…the Government of Canada and the Bank of Canada agree to renew the inflation target on the following basis:

• The target will continue to be defined in terms of the 12-month rate of change in the total CPI.
• The inflation target will continue to be the 2 percent mid-point of the 1 to 3 percent inflation-control range.
• The agreement will run for another five-year period, ending December 31, 2026.

The Government and the Bank further note that:

• Given that there is uncertainty about the maximum level of employment that is consistent with price stability, the Bank will continue to use the flexibility of the 1 to 3 percent control range to actively seek the maximum sustainable level of employment when conditions warrant.
• The Bank will consider a broad range of labour market indicators and will systematically report to Canadians on how labour market outcomes have factored into its monetary policy decisions.
• The Bank will also continue to leverage the flexibility of the 1 to 3 percent range to help address the challenges of structurally low interest rates by using a broad set of tools, including sometimes holding its policy interest rate at a low level for longer than usual.
• The Bank will utilize the flexibility of the 1 to 3 percent range only to an extent that is consistent with keeping medium-term inflation expectations well anchored at 2 percent.
• The Bank will explain when it is using the flexibility in the framework.”