level of employment that is consistent with price stability was higher than most previous estimates. our flexible inflation - targeting framework contemplates seeking or probing for maximum sustainable employment in the right circumstances. when we do this, we will be transparent, communicating that we are probing and what we are seeing in our labour market and inflation indicators as we do so. communication is key this brings me to the final, and very important, point. we know that monetary policy works better when people understand it. this starts with a clear mandate. and it is enhanced by transparency. the move toward increased transparency by central banks over the past 30 years has increased the credibility and effectiveness of monetary policy. by explaining how our decisions link to our mandate and by delivering low inflation for 30 years, our monetary policy framework has earned the trust of canadians. to keep that trust, we will be clear about how we are implementing flexible inflation targeting. because monetary policy needs to be forward - looking, our decisions and our communication are anchored by our inflation forecast, our interpretation of incoming data relative to that forecast, and our assessment of the risks. 11 this will include how a broad set of labour market indicators are affecting our estimates of potential output and our assessment of inflationary pressures. we will continue to use the flexibility built into our framework when that flexibility will help us better manage risks and achieve our mandate. and when we use that flexibility, we will be clear about why and how we are using it. you will see it in our inflation forecast, and we will discuss it relative to incoming data and our assessment of the risks. 11 see bank of canada, “ box 10 : evolving communications, increased transparency, ” monetary policy framework renewal ( december 2021 ) : 72 – 74. conclusion it ’ s time to conclude. our monetary policy framework has delivered prosperity to canadians by keeping inflation very close to 2 percent, on average, for 30 years. flexible inflation targeting is well understood and broadly supported by canadians. and the credibility of the target helps to stabilize both inflation and output. this agreement reaffirms our commitment to price stability and the 2 percent target. this is the framework we need now as we face elevated inflation and the challenge of reopening the economy. looking beyond the pandemic, the renewed agreement also articulates clearly how we will continue using the flexibility in our framework to address future challenges confronting our economy. it explains how we will use our extended set of monetary policy tools when needed. and it outlines how we

flexible inflationtargeting framework. for inflation to reach its target sustainably, the economy has to reach full employment. the two go hand in hand. our public consultations complemented the expert analysis. the results highlighted both the diversity of canadians ’ experiences and some common themes. when asked about the alternative monetary policy frameworks, the people we engaged with gave the most support to flexible inflation targeting, ait and a dual mandate. and overall, flexible inflation targeting was the preferred framework. 6 the overriding message that came though from the consultations is that canadians value low and stable inflation. inflation is difficult for many. when the cost of living goes up, they have trouble stretching to cover all their expenses. canadians are also concerned about the unequal impacts of inflation and economic cycles. it is striking to me that the results of our historical experience, modelling, simulations and public consultations were all in broad alignment. what comes through clearly is that flexible inflation targeting is hard to beat in theory and in practice. its 30 - year record of success has demonstrated that it is built for all seasons — it has survived the test of large global crises and done well in ordinary times. but some of the insights of ait and a dual mandate could help us address the two important challenges facing monetary policy. what we agreed the new agreement on our monetary policy framework secures the continued benefits of flexible inflation targeting. and it provides increased clarity on how we will implement the framework to control inflation and help the economy reach its full potential. the government of canada and the bank of canada agreed that the best contribution of monetary policy to the well - being of canadians is to continue to focus on price stability. the government and the bank also agreed that monetary policy should continue to support maximum sustainable employment. we also recognized that maximum sustainable employment is not directly measurable and is determined largely by non - monetary factors that can change over time. further, the government and the bank agreed that because well - anchored inflation expectations are critical to achieving both price stability and maximum sustainable employment, the primary objective of monetary policy is to maintain low and stable inflation over time. the inflation target continues to be the 2 percent midpoint of a 1 to 3 percent inflation - control range. we want to maintain and safeguard the advantages of a clear and achievable target that is well understood and highly credible. 6 bank of canada, “ toward 2021 : consultations with canadians. ” - 6the agreement also articulates how we will continue