Bank of Canada and government agree to keep 2% inflation target

OTTAWA, Nov 5 (Reuters) - The Bank of Canada on Thursday unveiled a new five-year monetary policy framework with the federal finance ministry which keeps its inflation target unchanged at 2%.

The monetary policy framework takes effect on January 1. The inflation target has been set at the 2% midpoint of a 1%-3% control range for the last 35 years.

The Bank of Canada said it would continue to use the flexibility of the 1%-3% target range to seek maximum sustainable employment when conditions warranted.

"The Bank and the Government are renewing the monetary policy framework while Canada’s economy faces profound change and heightened geopolitical uncertainty," the bank and the ministry said in a joint statement.

"(We) still agree that the best contribution monetary policy can make to the well‑being of Canadians is to maintain low, stable, and predictable inflation."

Monetary policy would continue to be conducted in a symmetric manner, with equal emphasis on deviations above and below the target, the statement said.

Governor Tiff Macklem will speak more about the renewed framework on November 24, the bank said.