The Bank of Canada believes that keeping inflation low, stable, and predictable is the best contribution monetary policy can make to strong and sustained growth in Canada. We run monetary policy in a symmetrical way. That is to say, we pay equal attention to persistent pressures that could move us away from our 2 per cent target - whether above or below.
When strong demand pushes the economy against the limits of its capacity and threatens to raise future inflation above the target, the Bank will raise interest rates to cool off the economy and mitigate those inflation pressures. When demand is weak, as we saw in 2001, future inflation is likely to ease.