Bank of Canada Plans to Retain 2% Inflation Target in 2026 Review
Bank of Canada Plans to Retain 2% Inflation Target in 2026 Review

Bank of Canada Plans to Retain 2% Inflation Target in 2026 Review

News summary

The Bank of Canada, under Governor Tiff Macklem, has confirmed it will maintain its 2% inflation target during the upcoming review of its monetary policy framework in 2026, emphasizing the target's success in anchoring inflation expectations. While the inflation target remains unchanged, the bank is exploring how to better measure core inflation amid supply shocks and how monetary policy intersects with housing affordability and inflation. Macklem highlighted the growing economic uncertainty caused by global shifts, including U.S. tariffs and changes in supply chains, which may increase inflationary pressures. The review will also assess how to adapt decision-making and communication strategies in this more volatile environment. Despite these challenges, the Bank of Canada recognizes that monetary policy cannot counteract structural economic changes or the impact of higher tariffs but aims to improve understanding of these factors. The decision to uphold the 2% target reflects confidence in its durability through past crises and ongoing economic uncertainty.

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