In an effort to maintain inflation at its targeted level the Bank of Canada designs its policies, in the short run, to

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The Bank of Canada designs its policies, in the short run, to keep real GDP close to potential output in order to maintain inflation at its targeted level. This strategy, known as the inflation targeting framework, aims to stabilize prices by keeping inflation expectations anchored, which in turn facilitates long-term economic growth. By keeping the level of real GDP close to potential output, the Bank ensures that the economy is neither overheated nor experiencing a recessionary gap, which helps to maintain stable prices in the economy.

In an Effort to Maintain Inflation at Its Targeted Level