OTTAWA (Reuters) – A survey of Canadians shows that most support the Bank of Canada’s approach to targeting inflation and this will be taken into account when the method is formally reviewed this year, the central bank said on Wednesday.
The bank has tried to keep the annual inflation rate at 2% since the early 1990s, a goal that it examines jointly with the federal finance department every five years.
The first of its kind survey was launched last August amid concerns about the effect the coronavirus pandemic could have on public perceptions of inflation and what the bank was doing to control it.
The Bank of Canada last year slashed its policy rate to 0.25% – the level it considers the floor – and said rates will stay low for at least another two years.
“Overall, most people we heard from supported the continued use of inflation targeting as the Bank’s approach to monetary policy,” the bank said in a statement.
The survey “will help frame our discussions with the Department of Finance” later this year, it said.
Many central banks are examining policy frameworks as inflation falters, debt-to-GDP levels surge and low rates leave little ammunition to fight recessions.
The Bank of Canada is reviewing four alternate frameworks – average inflation targeting, a dual mandate that targets both inflation and employment, nominal gross domestic product targeting and price-level targeting.
The U.S. Federal Reserve last August moved to a dual mandate, putting more weight on bolstering the labor market and less on worries about excessively high inflation.
The Bank of Canada said “when given a choice between having us maintain the inflation-targeting approach or shift our focus to economic growth or full employment, a large number chose inflation targeting.”
Many people felt factors beyond the bank’s control could affect job markets, it added.
(Reporting by David Ljunggren; Editing by Bill Berkrot)