What happened
The Government of Canada and the Bank of Canada issued a joint statement on 5 November 2026 renewing the country’s monetary policy framework for another five years. The agreement runs until 31 December 2031.
The central target does not change. Inflation is to be held at 2%, the midpoint of a 1% to 3% inflation-control range. Progress is judged by comparing the consumer price index, which tracks the prices of a typical basket of goods and services, with its level 12 months earlier.
The terms of the renewal
- The target stays at 2%, within the 1% to 3% range.
- Policy stays symmetric: the Bank gives equal weight to inflation running above and below the target.
- The Bank will keep using the framework’s flexibility to respond to economic shocks, while keeping a clear focus on bringing inflation back to target over time.
- The agreement lasts another five years, to 31 December 2031.
The two sides review and renew the framework every five years. After that, the Bank conducts monetary policy independently to meet the framework’s goals.
What the statement says about the past five years
The statement says repeated shocks hit the global and Canadian economies, including post-pandemic supply chain disruption, fast shifts in demand and geopolitical conflicts. These pushed up inflation worldwide. The Bank of Canada acted forcefully in response, and inflation returned to the 2% target and the 1% to 3% range.
The Bank describes the episode as a challenge in applying the framework amid extraordinary shocks, not as a flaw in its design. It says it has built up its ability to judge how supply-side shocks, meaning disruptions to the production and delivery of goods, reach Canadian prices. It has also worked on the right policy reaction when those shocks turn out bigger and longer-lasting than normal.
The statement notes that high inflation imposes significant costs on households and businesses and erodes purchasing power.
What it means for you
For anyone in Canada, including Indian-origin residents and students, the main message is continuity. The yardstick the central bank uses to set interest rates has not changed, so there is no new target to plan around. Borrowing costs on loans and mortgages will still depend on how inflation and the economy evolve.
For NRIs and others with Canadian dollar savings, loans or remittance plans, the renewal gives no signal on the direction of rates. It confirms only the goal that rate decisions will aim at. Tools such as the currency converter help in checking exchange rates when you move money.
Background
The statement says the 2% target has served Canadians well for more than three decades. The Government and the Bank say the monetary policy focus will remain on keeping inflation low and well anchored, while allowing flexibility to support economic growth and strong, stable labour market outcomes.
They also point to a changing backdrop: redrawn trade patterns, reconfigured supply chains, shifting investment flows, demographic change and wider use of artificial intelligence. For comparison with other central banks, see our report on the RBA’s cash rate increase.
