Public support is strong for 2% inflation target, Bank of Canada says

The Bank of Canada building is pictured in Ottawa on Tuesday, April 28, 2026. THE CANADIAN PRESS/Sean Kilpatrick

OTTAWA — The Bank of Canada says there is strong support for its flexible inflation targeting and the two per cent target rate in a new report.

The central bank consulted with stakeholders and the general public as part of the renewal process for its monetary policy framework agreement with the federal government, which it undergoes every five years.

“It was important for the bank to hear from Canadians as part of this process because inflation and interest rate decisions affect their day-to-day lives,” governor Tiff Macklem said in a statement Thursday.

• Latest economic news on BNNBloomberg.ca

The review comes after the spike in inflation in 2022 that saw the annual rate peak at 8.1 per cent, a 39-year high. Though the pace of price growth has normalized since then, higher prices have taken a toll. 

The central bank said many Canadians expressed concerns about the high cost of living and housing affordability, while they said clear communication about the information used to make interest rate decisions was key to fostering trust.

As part of the review, the central bank held meetings across the country with ordinary Canadians as well as private-sector economists, think tanks and consumer advocates.

“Participants in community conversations did not want prices to rise further, and they viewed higher interest rates as adding to their cost-of-living challenges,” the report said.

“Participants strongly preferred predictability when it came to changes in interest rates. They would rather have gradual than forceful changes in policy interest rates because, more than anything, they are looking for stability and predictability when they manage their household finances.”

The report noted that many Canadians did not feel that the consumer price index matched their own experiences when they went shopping.

• Latest updates on investing here

“The disconnect between official inflation data and Canadians’ daily experiences led to diminished trust in the CPI — and, by extension, in the bank — because the data are used to make interest rate decisions, the report said.

“Consumer and business groups encouraged the bank to adjust its messaging to better reflect the lived experiences of households and small- and medium-sized businesses.”

The current agreement between the Bank of Canada and the federal government sets an inflation target of two per cent within a range of one to three per cent.

In a speech late last year, Macklem was unwavering in his commitment to the central bank’s flexible inflation target, calling it more successful and more durable than anything that came before.

---

This report by The Canadian Press was first published June 25, 2026.