Canada used discretion, monetary targets and more discretion before a growing focus on price stability led to the introduction of inflation targeting in 1992.
| Years | Targets and attainment | Classification |
| 1974-5 | exchange rate floating, no formal targets; monetary policy operated primarily through short term interest rates | loosely structured discretion LSD |
| 1976-80 | wide declining monetary targets (first announced late 1975, with specified base period but open term) met; exchange rate floating but some smoothing intervention | loose converging monetary targets LCMT |
| 1981-91 | monetary targets undershot then abandoned; exchange rate floating but some smoothing; monetary policy considers range of indicators, notably exchange rate vs USD; ‘search for a new nominal anchor’ (Thissen, 2000); growing emphasis on price stability | loosely structured discretion LSD |
| 1992-2023 | inflation targets (first announced early 1991) declining 1992-3, met; then targets constant at 1-3%, met or near-met; policymakers use monetary conditions index (MCI, includes exchange rate as well as interest rates) to measure monetary stance, but MCI downgraded from late 1990s; refinements of inflation targeting but basic framework performing well (some brief deviations from target 2008-9, 2011-12, 2020-21, but expectations remain anchored), regularly renewed; macroprudential policies from 2008; from 2011 agreed possibility of extending time horizon for inflation target in response to financial stability issues; from 2016 more emphasis on financial stability; some unconventional monetary policies during Covid-19, including QE and forward guidance; from 2021 stronger emphasis on flexible IT and on aim of maximum sustainable employment; passive quantitative tightening from spring 2022; 2022-3 rises in commodity prices (Ukraine war) temporarily push actual and short-term expected inflation above target but longer-term expectations remain broadly anchored | full inflation targeting FIT |
Selected IMF references: RED Feb 1977 pp32-4; RED Dec 1977 pp37-40; RED 1978 pp39-41; RED 1980 pp40-1; RED 1983 pp37-9; RED 1984 pp35-7; RED 1988 pp32-4; RED 1991 p34; RED 1992 p26; EDP 1995 pp37-8; SI 1997 ch. VI; SR Dec 1998 pp10, 14-15; SR 1999 pp15-19; SR 2002 pp16-17; SR 2011 pp9-10; SR 2016 pp42, 62; SR 2018 p36; SR 2021 p37; SR 2023 pp12-13; SR 2024 pp6, 24, 28.
Additional source: Thissen (2000); Bank of Canada (2016, 2021).
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Monetary Policy Frameworks 