Bank of Canada renews monetary policy framework, keeps 2% inflation target through 2031

The Bank of Canada and the federal Department of Finance announced on Thursday (November 5) that the central bank's monetary policy framework has been renewed for five years, through December 31, 2031, keeping the inflation target at a 2 percent annual rise in the consumer price index — the midpoint of a 1 to 3 percent control range — to be pursued symmetrically. The new framework takes effect on January 1, 2027. (Photo: file photo of the Bank of Canada building.)

Employment and climate language dropped, focus on price stability

Compared with the 2021 version, the new framework drops the commitment to "actively seek maximum sustainable employment" and removes references to climate change, making price stability the bank's clear top priority. Shelly Kaushik, an economist at the Bank of Montreal, said the framework's emphasis on achieving 2 percent headline inflation "is reading a little more hawkish."

First framework revision under Carney

The renewal is the first change to the framework under Prime Minister Mark Carney, who led the Bank of Canada as governor from 2008 to 2013. Bank of Canada Governor Tiff Macklem is scheduled to deliver a speech in Toronto on November 24 to explain the new framework in more detail.

Context: a rate hike to 2.5% in late October

The bank raised its policy rate by a quarter of a percentage point to 2.5 percent on October 28, its first hike since July 2023. The latest data show Canadian headline inflation at 3.1 percent year on year in September, with core inflation near 2 percent; the bank expects inflation to stay above 3 percent until late next year.

(Sources: Reuters, Dow Jones Newswires, November 5, 2026.)