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The goal of Canadian monetary policy is to contribute to rising living standards for all Canadians through low and stable inflation. Specifically, the Bank aims to keep the rate of inflation, as measured by the annual rate of increase in the consumer price index, inside a target range established jointly with the government. Since 1995, the target range has been 1 to 3 per cent.

The Bank implements monetary policy through its influence on short-term interest rates and thereby on monetary conditions. The concept of monetary conditions incorporates the effect on the economy of both short-term interest rates and the exchange rate for the Canadian dollar. Changes in monetary conditions affect inflation only indirectly and are usually felt over a period of 18 months to two years.
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