Monetary policy has been calibrated based on judgments about the relative strengths of these competing forces, with an eye firmly fixed on the policy objective of keeping inflation at our 2 per cent target. Currently, total CPI inflation in Canada is 1.8 per cent.
Excluding the one-time effect of the January GST cut, total CPI inflation is 2.4 per cent, and core inflation (which excludes the more volatile components) is 1.5 per cent. Staying on top of all the forces at play is an essential preoccupation of the Bank of Canada.