OTTAWA (Reuters) - Few major countries have made significant changes to their inflation-targeting regimes in recent years, according to research released on Monday by the Bank of Canada, which is studying whether to alter its own monetary policy framework.
The central bank’s main policy goal is to keep annual inflation at the midpoint of a 1 percent to 3 percent range, a target set jointly with the Canadian government every half decade. The latest renewal is due later this year.
The Bank of Canada is reviewing the appropriate level for the inflation target, which has remained at the 2 percent midpoint since 1995. Governor Stephen Poloz has said repeatedly the bar for change is high.
The research published on Monday found that since 2012, there have been few changes to numerical inflation targets in advanced economies.
One exception is Japan, which raised its target from 1 to 2 percent, bringing it in line with the goals of most of its advanced economy peers.
Although inflation targets have remained largely unchanged, central banks have implemented a number of different policy measures, such as quantitative easing and negative interest rates, with the goal of achieving their inflation objectives, the article said.
While there have also been few substantial changes to the measures of core inflation commonly used by central banks, some, including Canada, have shifted the emphasis toward a broader set of measures rather than one specific gauge, the article said.
Core inflation measures typically exclude volatile items, often energy and food. The Bank of Canada uses a core measure that excludes eight volatile components.
But in the last four years, many of the central bank’s monetary policy reports have also included alternative core inflation measures and have more recently referred to underlying inflation.
In many cases central banks do not explicitly announce or explain the rationale for the changes in emphasis on core measures, the article said, noting it is unclear whether the shifts are permanent.
Reporting by Leah Schnurr Editing by W Simon