Canada's New Government Renews Inflation-Target Agreement With the Bank of Canada

The Honourable Jim Flaherty, Minister of Finance, today announced that as part of its Advantage Canada plan to build a strong economy for Canadians, Canada's New Government has reached an agreement with the Bank of Canada to renew Canada's inflation-control target for a further five years to 2011.

"Maintaining low, stable and predictable inflation goes right to the bottom line of every household budget," said Minister Flaherty. "It ensures affordable mortgage rates, allows more families to purchase new homes, secures the value of incomes and keeps the costs of purchases stable."

First introduced in 1991, the inflation-target regime has kept inflation low and stable. It has allowed households and businesses to make more accurate long-range plans and benefit from lower mortgage and loan costs. Under the renewed agreement, the inflation target will continue to be the 2 per cent mid-point of the 1 to 3 per cent inflation-control range.