It’s our job to promote the economic and financial welfare of Canadians, and the best way we can do that is to provide an environment of low and stable inflation. Why? Because low and stable inflation allows consumers and businesses to make decisions about the future with greater certainty.
Since the Bank began targeting inflation almost 25 years ago, interest rates have been lower and economic growth has been stronger and more stable. We know that inflation is fundamentally driven by the amount of economic slack we have. If the economy is operating below its capacity, that will put downward pressure on inflation. However, inflation is a noisy indicator.