Inflation

Back in 1981, with inflation running at 12.4%, Canadians had to live with the uncomfortable knowledge that what we bought that year would cost significantly more the next.

When the Bank of Canada tries to keep inflation in a target range of 1% to 3%, it may influence short-term interest rates in order to change demand in goods and services. It is expected that when interest rates increase, demand for goods and services decline and vice versa. This method has been highly successful in keeping inflation in check over the past decade. Since 1992, the inflation rate has averaged 1.5%.