We did this because we had learned that, once inflation expectations are anchored, they contribute to more stable output and employment growth, allowing for more durable gains in real income over time. 2. Inflation targeting and the behaviour of inflation  In February 1991, the Bank and the Government of Canada jointly announced a series of inflationreduction targets.
4  In addition, the economy was buffeted by shocks that had not been seen before. For example, the economy was hit by adverse oil-price shocks that fed directly into inflation expectations in the absence of a clear nominal anchor for monetary policy. And these shocks, combined with other structural changes, made it difficult for workers and employers to judge how to respond.