In remarks in Brandon, Senior Deputy Governor Carolyn Rogers set out how the Bank of Canada is approaching the renewal of its monetary policy framework and argued the existing framework, including the 2% consumer price index inflation target (the midpoint of a 1% to 3% band), does not need to change even as implementation is refined to cope with a more variable inflation environment. Rogers pointed to structural forces that the Bank does not view as temporary, including volatile global trade policy and US protectionism, demographic shifts after a substantial reduction in immigration that the Bank’s forecasts suggest will leave the labour force with almost no growth over the next few years, and artificial intelligence with both productivity potential and disruption risks. Lessons from the recent inflation surge include improving the Bank’s ability to detect and assess supply shocks, incorporating more real-time data and business outreach, and using scenario analysis alongside baseline forecasts. The Bank is also reflecting on how it communicates the relationship between headline and core inflation measures and is reviewing how housing market imbalances interact with inflation, including how shelter inflation is measured, while reiterating that interest rates are not an effective tool to directly address housing affordability. Rogers added that inflation has been near 2% since mid-2024 but that affordability concerns persist because price levels remain much higher than three to four years ago and because household experiences differ from the average. Against the backdrop of the war in Iran, Rogers said higher energy prices are expected to push inflation higher in the near term and that the Bank will monitor whether that spreads more broadly, noting its most recent decision kept the policy rate at 2.25% and that it stands ready to respond as the outlook evolves. The Bank plans to publish the framework review’s conclusions and supporting research later in 2026, with the renewed five-year agreement letter to be released once the review with the federal government is complete.
Bank of Canada 2026-03-26
Bank of Canada signals 2% inflation target to remain as monetary policy framework renewal focuses on implementation changes
Senior Deputy Governor Carolyn Rogers outlined the Bank of Canada's approach to renewing its monetary policy framework, maintaining the 2% consumer price index inflation target despite a more variable inflation environment. Key considerations include structural forces like global trade volatility, demographic shifts, and AI impacts, alongside lessons from recent inflation surges. The Bank will publish the framework review's conclusions and supporting research later in 2026.