Monetary Policy Report Update - January 2008

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The Canadian economy grew broadly in line with the Bank’s expectations in the second half of 2007. Despite some slowing in growth in the fourth quarter, the economy continues to operate above its production capacity. Both total and core inflation have been lower than was projected in the October Monetary Policy Report, largely reflecting a price-level adjustment related to increased competitive pressures in the retail sector stemming from the level of the Canadian dollar.