Canadian Finance Minister Joe Oliver said the country has been well served by its 2 percent inflation target, and he’ll discuss it with the central bank before its agreement on the goal is up for renewal next year.
Oliver, speaking to reporters in New York Wednesday, declined to comment on the possibility the Bank of Canada may modify its inflation target.
“Certainly, the current target has served us well, but this review looks forward,” Oliver said. “Monetary policy is obviously within the purview of the Bank of Canada,” he said. “But on this issue, we do work together. And we’ll have those discussions.”
The central bank has been discussing the renewal of the inflation target since 2014, the “bar for change is very high” and “no decisions have been made,” Bank of Canada spokeswoman Rebecca Ryall said in an e-mail. The issues the bank will consider in the renewal include whether the 2 percent target remains appropriate, how to integrate financial stability and price stability, the best way of measuring core inflation, she said.
Policy makers have said a higher inflation target may help avoid long periods where interest rates get stuck at about zero when the economy needs stimulus.
Canada currently targets 2 percent inflation, the midpoint of a 1 percent to 3 percent inflation-control range.
“I appreciate the arguments in favor of boosting the inflation target but there are a lot of arguments against it,” said Doug Porter, chief economist at BMO Capital Markets in Toronto, said in a telephone interview Wednesday.
Some people may not believe the inflation target would only be raised once, and Canada’s move would come as many other nations have set their targets around 2 percent, Porter said.