Monetary Policy Report - October 2008
Three major interrelated global developments are having a profound impact on the Canadian economy and making the outlook more uncertain than it was at the time of the July Monetary Policy Report Update. First and foremost, the intensification of the global financial crisis in recent weeks has been reflected in severe strains in global money and credit markets and sharp falls and extreme volatility in global equity markets. The associated need for the global banking sector to continue to reduce leverage will restrain growth for some time. Second, there is growing evidence that the global economy is heading into a mild recession, led by a U.S. economy that is already in recession and expected to pick up only modestly through 2009. Third, there have been sharp declines in the prices of many commodities since the July Update. These developments have reduced inflationary pressures globally.