Inflation targeting and monetary policy in practice: the experience of the Bank of Canada

Mikael Khan1

Chapter 23 in Research Handbook on Inflation, 2025, pp 507-518 from Edward Elgar Publishing

Abstract: This chapter provides an in-depth analysis of the Bank of Canada's experience with inflation targeting since its adoption in 1991, highlighting its successes and the challenges it faced. It begins with a historical overview of the transition to inflation targeting, emphasizing the framework's role in achieving price stability. The chapter discusses key aspects that have shaped Canada's inflation targeting framework, including the determination of the inflation target level, the use and measurement of core inflation, and the integration of financial stability considerations. It also explores alternative monetary policy frameworks and their potential benefits. The chapter concludes by examining the impacts of the COVID-19 pandemic on inflation targeting, addressing issues such as supply shocks, the use of core inflation measures, and the overall effectiveness of the framework in a post-pandemic environment.

Keywords: Inflation targeting; Bank of Canada; Core inflation; Financial stability (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035327751
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