May 17 – 11:20 ET) – The Bank of Canada is renewing its target for inflation control.

Based on Canada’s experience with inflation targeting over the past 10 years, the federal government and the central bank are agreeing to renew the inflation-control target. Under the renewed agreement, the inflation-control target range will continue to be 1% to 3%. Within this range, monetary policy will focus on keeping the trend of inflation at the 2% target midpoint.

The length of the agreement will be five years, until Dec. 31, 2006. Before the end of 2006, the government and the bank will review the experience over the period and determine the appropriate target for the period ahead.

“The commitment by the government and the bank to this inflation-control target will ensure that Canadians continue to derive the economic and social benefits from low, stable and predictable inflation and will underpin confidence in Canada’s economic prospects in the coming years,” said the Bank of Canada and the Government of Canada in a joint statement.