Canada to research inflation target

Although the Bank of Canada's inflation target will remain at 2% for the next five years, the central bank has announced a major research project on the benefits of lowering the target.

The central bank and the ministry of finance have agreed to extend the current inflation target of 2% for headline inflation, with a 1% tolerance buffer, until 31 December 2011.

A statement on the Bank of Canada's website noted that while Canada's 15 years of experience with inflation targeting have been very