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Finance Minister Jim Flaherty appears to be ruling out any change to the Bank of Canada's 2-percent inflation target, but confirmed he and Governor Mark Carney are contemplating new, broader language to describe the bank's mandate.
The Bank's current five-year mandate on inflation expires at the end of the year, meaning both Flaherty and Carney must jointly announce whether to renew it as is or make adjustments.
In an all-party vote Thursday, MPs on the House of Commons finance committee decided they will invite witnesses on the topic of whether the Bank's mandate should be changed to include targets beyond inflation, such as full employment or nominal GDP.
However such large changes appear to be off the table.
"The governor and I have discussed this [inflation targeting mandate renewal] at some length and I think we are understanding each other. We are 'd'accord,' we are in line with each other on this," said Flaherty. "So we're not talking about a new policy or a new mandate for the Bank of Canada. What we are talking about is being more explicit about what the mandate of the Bank of Canada is."
Flaherty's comments at a news conference in Ottawa comes as Statistics Canada reported inflation inched higher last month. The consumer price index rose to 3.2 percent, while the core inflation rate -- which the minister pointed to as the relevant number for inflation targeting -- hit 2.2 percent.
"It's within the range so far. As you know the range is 1 to 3 percent. People forget that the number is not 2 percent. The mandate from the government to the Bank of Canada, our agreement, is between 1 and 3 percent. The Bank's doing a good job on that," he said.
"I'm more concerned quite frankly about growth in the economy, economic growth, and I'm pleased that we're seeing reasonable, moderate economic growth in Canada, some good signs in the United States. I wish I could say that in Europe, but I don't see that in the European context. I think Europe could help itself by resolving the issues that are on the table there that have been festering for quite a while, but actually in North America I'm fairly confident about modest growth over the next while, which will help, importantly, with respect to jobs."