Bank of Canada Sticks With 2% Inflation Target Ahead of 2026 Review

Bank of Canada Governor Tiff Macklem said the central bank will keep its 2% inflation target when it renews its monetary-policy framework next year, ending speculation that officials might consider a different objective after the post-pandemic surge in prices. Speaking in Mexico City on Tuesday, Macklem warned that steep U.S. tariffs and persistent supply headwinds are likely to add price pressures and uncertainty, but he argued that a credible, well-understood target remains the best anchor for expectations. Scenario analysis rather than a single forecast will guide policy as the bank confronts a wider range of potential shocks, he said. Macklem added that the review will instead focus on improving core inflation measures, understanding supply-side shocks and assessing how housing costs should be incorporated into rate decisions. While acknowledging that monetary policy cannot offset lost efficiency from higher tariffs, he stressed the bank’s commitment to bringing inflation back to the 2% goal and maintaining public trust.