2 Let me spend a bit of time discussing these two questions. Is 2 per cent the right target? When the Bank and the Government of Canada first agreed on a series of targets for inflation in 1991, a 2 per cent rate of inflation was seen by the Bank as a step towards price stability, which had yet to be defined.
But it was also seen by most as a very ambitious target. After all, it had been decades since the Canadian economy had experienced a sustained period with inflation at 2 per cent or less. Indeed, during the 1980s, we had had trouble containing inflation to 4 per cent.