Bank of Canada, Federal Government Renew 2% Inflation Target for Another Five Years

06:14 AM EST, 11/06/2026 (MT Newswires) -- The Bank of Canada and the federal government agreed to maintain the 2% inflation target for another five years, extending the current monetary policy framework through the end of 2031, according to a joint statement. The agreement retains the 1% to 3% inflation control range, allowing Canada's central bank to respond flexibly to economic shocks while maintaining low, stable and predictable inflation, according to late Thursday's joint statement. As global trade, supply chains and investment flows continue to evolve, the BoC and the government reiterated that keeping prices stable remains the key way monetary policy can support Canadians' economic well-being. Although the BoC sets interest rates independently, its inflation-targeting mandate is agreed upon with the federal government. Last week, the central bank raised interest rates by 25 basis points, marking its first hike since July 2023, amid concerns that rising energy prices would fuel inflation and keep it above target for longer. The 2026 mandate places greater emphasis on bringing inflation back to target within a reasonable timeframe, wrote Royce Mendes, head of macro strategy at Desjardins Group, in a note late Thursday. "These changes reinforce the hawkish turn from the Bank of Canada," added Mendes.