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Public sector institutions have been undergoing significant changes over the past decade. One of the most important changes has been the move to greater accountability. Public institutions are now required to be more open and to provide more information about their operations. Or, to use the word currently in vogue, to be more “transparent.”

Globalization - that is, the growing integration and interdependence of national economies - is changing dramatically the economic landscape. Countries are trading more goods and services, an increasing number of firms now operate across national borders, and savers and borrowers have greater access than ever before to global financial markets.

This is a report of the Governing Council of the Bank of Canada: Mark Carney, Tiff Macklem, John Murray, Timothy Lane, Jean Boivin and Agathe Côté. It presents the Bank’s outlook based on data received up to 8 April 2011.

The Canadian economy continues to operate just above its full production capacity, and the near-term outlook for core inflation has moved slightly higher.

The global economy has been unfolding largely as expected, and prospects for continued robust growth are quite favourable, especially over the near term.

The Canadian economy continues to adjust to major global developments.

Since the May Report, the international economic environment has continued to improve. Economic activity abroad grew faster than expected, while inflation in the major economies remained subdued.

Canada’s inflation-control targets establish a specific medium-term objective for monetary policy.

This is the second in a series of semi-annual reports designed to increase the transparency and understanding of Canadian monetary policy.

Recent indicators point to the start of a global recovery from a deep, synchronous recession.