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This issue features three articles that present research and analysis by Bank of Canada staff. The first updates previous Bank estimates of measurement bias in the Canadian consumer price index; the second uses a new term-structure model to analyze the relationship between the short-term policy rate and long-term interest rates; and the third examines indicators of balance-sheet risks at financial institutions in Canada.

The Bank projects that the economy will grow by 2.1 per cent in 2012, 2.3 per cent in 2013 and 2.5 per cent in 2014. The economy is expected to reach full capacity in the second half of 2013.

The survey results point to an overall easing in busi­ness-lending conditions during the second quarter of 2012, although the degree of consensus on easing has moderated since the previous survey.

Responses to the summer survey suggest that businesses generally remain positive about the outlook, but are mindful of renewed uncertainty regarding the global economic environment.