Part 6: Inflation

This part consists of two short-answer questions. The number of points awarded per question will be indicated to you as you go along. Instructions: Answer in the space provided. Referring to the following statement, answer questions 1 and 2.

The Bank of Canada estimates that: "high energy prices kept the rate of increase in the headline CPI in Canada slightly above the Bank's target [...]. However, core inflation remained below 2%, due to persistent downward pressure from the prices of imported consumer goods. Under these circumstances, the Bank has decided to raise the target for the overnight rate".

1)Set the overall CPI.

2)What is the Bank of Canada's current inflation target?