Finance minister Jim Flaherty announced that the federal government has reached an agreement with the Bank of Canada to renew Canada’s inflation-control target for a further five years to 2011.

Under the renewed agreement, the inflation target will continue to be the 2% mid-point of the 1% to 3% inflation-control range. The agreement will run for another five-year period, ending Dec. 31, 2011.

The Bank of Canada will continue its ongoing research into potential improvements in the monetary policy framework. Before the end of 2011, the government and the Bank of Canada will review the experience over the period and the results of the research, and determine the appropriate target for the years ahead.

“Maintaining low, stable and predictable inflation goes right to the bottom line of every household budget,” said Flaherty. “It ensures affordable mortgage rates, allows more families to purchase new homes, secures the value of incomes and keeps the costs of purchases stable.”