“For markets, the takeaway is that the will be more tolerant of inflation inside the 1%-to-3% band, rather than always focusing on 2%, as long as inflation expectations are anchored.
The most common labour market metric is the unemployment rate, which is defined as the percentage of the labour force that does not have a job and is actively looking for work.
If inflation rises above the target rate, the Bank of Canada might raise the overnight interest rate in the hopes that will curb demand for goods and services and put downward pressure on inflation.