Experience has shown that the best way for a central bank to meet this goal, given the instruments at its disposal, is by keeping inflation low and stable. Low and stable inflation increases confidence in the future value of money, and allows for clear price signals. These benefits, in turn, help consumers, savers, and investors to make sounder economic decisions.
The Bank of Canada has a clear inflation objective, and that is to keep the annual increase in the consumer price index as close as possible to 2 per cent. That objective, together with our transparent framework for how we go about achieving it, helps to anchor inflation expectations, and adds a significant amount of certainty to the economic and financial environment.