Inflation targets of the major central banks: Fed, ECB, BoE, BoJ, SNB, BoC, RBA and RBNZ

Inflation targets explain much of what central banks do. When inflation runs above target, markets expect higher interest rates; when it runs below, lower. Knowing each bank's target, and the measure it uses, makes interest rate expectations and currency reactions easier to follow.

The targets

• Federal Reserve (US): 2% over the longer run, measured by the personal consumption expenditures (PCE) price index.
• European Central Bank: 2% over the medium term, measured by the Harmonised Index of Consumer Prices, with deviations in either direction treated as equally undesirable.
• Bank of England: 2% consumer price inflation, set by the government in the Bank's remit.
• Bank of Japan: 2% consumer price inflation, a target adopted in January 2013.
• Swiss National Bank: price stability, defined as consumer price inflation of less than 2% a year; deflation also counts as a breach.
• Bank of Canada: 2% total consumer price inflation, the midpoint of a 1–3% range. The current agreement with the government runs to the end of 2026.
• Reserve Bank of Australia: consumer price inflation of 2–3%.
• Reserve Bank of New Zealand: 1–3% over the medium term, with a focus on the 2% midpoint. Since December 2023 its remit has focused on price stability alone, after maximum sustainable employment was removed as an objective.
• Norges Bank: 2%.
• Sveriges Riksbank: 2%, measured by CPIF, consumer prices with a fixed mortgage interest rate.

Recent inflation against those targets

The latest readings show why central banks are moving in different directions:

• United States: consumer prices up 3.4% in August 2026; PCE prices up 3.7% in July (PCE report)
• Euro area: 3.3% in August, flash estimate (report)
• United Kingdom: 2.9% in July (report)
• Switzerland: 0.8% in August (report)
• Norway: 3.0% headline and 2.7% underlying (CPI-ATE) in July (preview)

Why the details matter

• Different measures, different numbers. US PCE and CPI inflation can differ considerably, and the Fed's target refers to PCE.
• Ranges give room. A bank with a 1–3% range may tolerate inflation that would prompt a bank with a single 2% goal to act.
• Targets and mandates can change. Canada reviews its agreement every five years, and New Zealand's remit changed in 2023. Changes can shift long-term interest rate expectations.
• Expectations are part of the picture. Central banks watch surveys of expected inflation because expectations above target can make inflation stick (US consumer sentiment).

For how rate decisions feed through to exchange rates, see how interest rate decisions move currencies.