Monetary Policy Report Update - July 2005

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The update on global and Canadian economic developments presented in this Report highlights three issues. First, the balance of information on capacity pressures indicates that the Canadian economy is operating close to its production limits. Second, over the past several months, further progress has been made across sectors of the Canadian economy in adjusting to global developments. Third, while the risks to the outlook through 2006 appear balanced, the medium-term risks related to global imbalances are increasing.

On the whole, the Bank’s outlook for output and inflation in Canada through to the end of 2006 is little changed from the scenario outlined in the April Monetary Policy Report.