Monetary Policy Report - May 1997

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Since the last Report, the Canadian economy has advanced broadly in line with expectations. Inflation has remained low, the domestic economy has begun to respond to the substantial degree of monetary ease in place, and the external economic environment has been favourable.

With rapidly improving fiscal positions of governments and expectations of continued low inflation underpinning the value of the Canadian dollar, short- and medium-term interest rates have remained appreciably lower than those in the United States.