Nationwide public consultations show the Canadian public supports the central bank’s targeting of a 2 percent annual inflation rate, a new report from the Bank of Canada says.
The conclusion comes from consultations held ahead of the central bank’s 2026 monetary policy framework renewal, which takes place every five years. The meetings included ordinary Canadians, private-sector economists, think tanks, and consumer advocates across the country, the central bank said.
“Support for maintaining flexible inflation targeting and the 2% inflation target was strong,” said the report released on June 25. “At the same time, many participants expressed concerns about the high cost of living and housing affordability.”
The review follows the surge in inflation in 2022, with the annual rate peaking at a 39-year high of 8.1 percent. The rate has neared the Bank of Canada’s 2 percent goal since then, but prices have not decreased, keeping household budgets under pressure. The costs of common items such as groceries, rent, and insurance have continued to climb, although at a slower pace.
Many Canadians voiced concern about the high cost of living and housing affordability, emphasizing that transparent communication about the data used in interest rate decision-making is essential for building trust, the central bank said.
“Participants in community conversations did not want prices to rise further, and they viewed higher interest rates as adding to their cost-of-living challenges,” the report said, noting that they also preferred predictable interest rates.
The participants also said they would prefer gradual changes in interest rates over abrupt ones, because they prioritize stability and predictability in managing household finances, the report said.
Canadians also told the central bank that the consumer price index (CPI) did not match their own experiences when they went shopping.
“The disconnect between official inflation data and Canadians’ daily experiences led to diminished trust in the CPI — and, by extension, in the bank — because the data are used to make interest rate decisions,” the report said. “Consumer and business groups encouraged the bank to adjust its messaging to better reflect the lived experiences of households and small- and medium-sized businesses.”
The current agreement between the Bank of Canada and the federal government sets an inflation target of 2 percent, which is the midpoint of its inflation-control range of 1 percent to 3 percent. It represents the official goal for the year-over-year increase in the CPI, which measures the average cost of living for Canadians.
The Canadian Press contributed to this report.
