Monetary policy has worked to reduce price pressures in the Canadian economy. Inflation is now around 2% and is expected to remain near the middle of the Bank of Canada’s control range of 1% to 3% over the projection.
Overview
Consumer price index (CPI) inflation has fallen and is now around 2%. The recent decline in inflation reflects both lower energy prices and weaker underlying inflationary pressures. Overall, inflation is near target, but the distribution of inflation rates across CPI components remains wider than usual.
Over the projection horizon, inflation is expected to remain close to the 2% target. Core inflation is forecast to decline gradually. There are both upside and downside risks to the Bank of Canada’s outlook for inflation, and the Bank is equally concerned with inflation rising above the target or falling below it.
The Canadian economy has evolved broadly as anticipated. Relative to the July forecast, growth in the …