Choose your settings
Choose your language
Economic Viewpoint

Questioning Inflation Targets

March 20, 2018
François Dupuis, Vice-President and Chief Economist • Hendrix Vachon, Senior Economist

Most central banks manage their monetary policies based on an inflation target. Few of them have managed to achieve their objective in the last few years, however. Would targeting price level instead of price changes be a better idea? This idea is not new; the Bank of Canada has already considered this option when renewing its inflation target.  Besides the debate on whether it would be more effective, targeting price levels would certainly force the central banks to recoup lost ground after several years of weak inflation.  Some could prove to be more patient before they start tightening their monetary policies.