Bank of Canada renews 2% inflation target, adds jobs to mandate

The Bank of Canada will maintain its 2% inflation target for the next five years, but has formally been given license to moderately overshoot it to “support maximum sustainable employment.”

In a mandate renewal released jointly with the Canadian government on Monday, the central bank added a new requirement whereby officials will use its 1% to 3% control range to “continue” supporting employment levels if warranted, while emphasizing the primacy of targeting inflation.

The renewal puts more weight on the inflation range than has been the case in past statements and explicitly introduces the need to consider the labor market.

But officials made that objective less important for monetary policy than price stability.