Monetary Policy Report

At the time of last November’s Monetary Policy Report, two issues dominated the analysis: the global economic slowdown and the fallout from the September terrorist attacks.

In the November Monetary Policy Report, the timing and extent of the recovery in economic activity in Canada this year was seen as depending crucially on geopolitical developments and on how quickly consumer and business confidence would return to normal.

Two major issues dominate the analysis and policy discussion in this Monetary Policy Report: the nature and extent of the global economic slowdown that began late last year and the consequences of the terrorist attacks in the United States.

The Bank’s outlook for inflation and overall economic activity in Canada to the end of 2002 has not changed fundamentally from that presented in the May Monetary Policy Report.

At the time of the November 2000 Monetary Policy Report, although signs of the anticipated slowing of the U.S. economy were becoming apparent, the momentum of the global economy was considered strong.

On 23 January, the Bank reduced the Bank Rate by one-quarter of one percentage point to 5 3/4 per cent.

Over the last six months, most countries have continued to register strong economic growth.

Information received since the last Monetary Policy Report continues to show solid economic growth in the United States, Europe, and the emerging markets.

The global economy has shown greater strength than was anticipated at the time of the November Report.

Information received since the last Monetary Policy Report, released on 17 November, points to a stronger pace of economic expansion in the United States and Europe than was expected at that time, and confirms the hesitant nature of the recovery in Japan.