BoC consults on monetary framework, finds support for 2% target
The Bank of Canada has published a report summarizing feedback from its consultations on the monetary policy framework. Canadians expressed strong support for the 2 percent inflation target but raised concerns about the cost of living and housing affordability.
Canadians value stability, raise housing concerns
The Bank of Canada conducted consultations across the country to gather public and stakeholder views on its monetary policy framework, which is reviewed every five years.
The discussions focused on three key challenges identified by the Bank's research: how monetary policy should respond to adverse supply shocks affecting inflation, how the Bank should assess and communicate about inflation in a volatile world, and the impact of monetary policy on housing demand and supply, including the measurement of shelter price inflation.
Feedback indicated strong support for maintaining flexible inflation targeting and the 2 percent inflation target, reflecting Canadians' value for the framework's stability.
However, many participants also voiced concerns regarding the high cost of living and housing affordability.
Framework renewal and clear communication
The consultations are a crucial step in preparing for the renewal of the agreement between the Bank of Canada and the Government of Canada on the monetary policy framework, which is due before the end of 2026.
Governor Tiff Macklem emphasized the importance of public input, stating, "It was important for the Bank to hear from Canadians as part of this process because inflation and interest rate decisions affect their day-to-day lives.
" Participants highlighted that clear communication about the information used for interest rate decisions is essential for fostering public trust in the central bank.