Key Takeaways
- The inflation target stays at 2%, the midpoint of the 1% to 3% inflation-control range, measured by the 12-month change in the consumer price index.
- The renewed agreement runs from January 2027 to December 31, 2031, and policy will continue to be conducted symmetrically, with equal emphasis on misses above and below target.
- The renewal lands a week after the Bank raised its policy rate by 25 basis points to 2.5% on October 28, 2026.
Canada's 2% Inflation Target Is Now Locked In Until the End of 2031
Canada's inflation target is not changing. In a joint statement dated November 5, the Government of Canada and the Bank of Canada renewed the framework for another five years, keeping the inflation target at 2% — the midpoint of the 1% to 3% inflation-control range — through December 31, 2031.
The target is measured by the 12-month rate of change in the consumer price index, and policy will continue to be conducted symmetrically, with equal emphasis on misses above and below target. Price stability remains the primary focus: keeping inflation "low, stable, and predictable" is how monetary policy best protects Canadians from large increases in the cost of living. Ottawa sets the framework jointly with the Bank; the Bank then independently conducts policy to hit it.
Why It Matters for Your Mortgage, Loan and Savings
The framework does not set your borrowing costs, but it anchors every rate decision the Bank makes. The policy rate sits at 2.5% after a 25-basis-point increase on October 28. Variable mortgage rates and lines of credit move with that rate; fixed rates follow the bond market's view of where the Bank is headed. A firm 2% anchor through 2031 tells borrowers and savers what the Bank is aiming for. Governor Tiff Macklem will speak on the renewed framework November 24 in Toronto, per the Bank's events schedule.
The Twikup Take
No surprises here, and that is the point: after the worst inflation shock in decades, the 2% anchor was never judged the problem. Every mortgage renewal from 2027 to 2031 will be made against a central bank openly committed to it.
Photo: "Ottawa: Bank of Canada" by Wladyslaw, via Wikimedia Commons, licensed under CC BY-SA 3.0.