OTTAWA (AFX) - The government and the Bank of Canada said they have agreed to extend by five years their overall inflation-control target of 1-3 pct.
The bank said that monetary policy actions will remain directed towards the 2-pct target midpoint over a six-to-eight quarter period. The BoC also said it will introduce in June a new, more reliable, core inflation rate index.
The new CPIX index will provide a more accurate indicator of likely overall inflation trends than the traditional core index which excludes the energy and food sectors, it said.
The new CPIX will include 84 pct of the consumer basket instead of the 74 pct included in the current core CPI, it said.
The CPIX will exclude just five of the food and energy components (fruit, vegetables, gasoline, fuel oil, and natural gas) that are most volatile.
It will also exclude intercity transportation because of the volatility of aviation fuel costs and temporary airline seat sales, tobacco, and the costs of mortgage interest, BoC added.