This Report presents the Bank of Canada’s assessment of the trend of inflation in Canada and explains the monetary policy actions deemed necessary to keep inflation within the Bank’s inflation-control target range. Downward pressure on inflation over the last six months has warranted an easing in monetary conditions, which the Bank encouraged through reductions in its operating band for overnight interest rates.These actions have been taken against a favourable backdrop of improving financial market sentiment that reflects both progress on the fiscal front domestically and global reductions in short-term interest rates.