Monetary Policy Report Update - January 2006

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The Canadian and global economies are evolving essentially in line with the Bank’s expectations. The outlook for growth and inflation in Canada is similar to that in the October Monetary Policy Report.

Canada’s real gross domestic product (GDP) is expected to have grown at an annual rate of about 3 per cent in the second half of 2005. The Canadian economy continues to adjust to global developments and to the associated changes in relative prices. Prices of energy commodities surged in the second half of 2005. The Canadian dollar has appreciated modestly against the U.S. dollar to a slightly higher range of 85 to 87 cents U.S.