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Monetary policy is working to reduce inflationary pressures and inflation is coming down, although it will take more time to see if this progress proves durable. The Bank projects that inflation will stay around 3% into the second quarter of 2024, ease below 2.5% in the second half of the year and return to target in 2025.

The Canadian economy ended 2024 in a strong position. However, the trade conflict and tariffs are expected to slow growth and add to price pressures. The outlook is very uncertain because of the unpredictability of US trade policy and the magnitude of its impact on the Canadian economy.

The Bank updated its forecast for real economic growth to 1.3 percent this year, 1.9 percent next year and 2.0 percent in 2021.

Real GDP in Canada is expected to grow by 2.0 per cent in 2018, 2.2 per cent in 2019 and 1.9 per cent in 2020.

The Bank projects that growth in the Canadian economy will accelerate from 1.6 percent this year to 2 percent in 2021.

It takes time for our policy decisions to filter—or be transmitted—through the economy and financial system.

In the Update, the Bank noted that the outlook for the global economy has deteriorated since the October Monetary Policy Report, with the intensifying financial crisis spilling over into real economic activity.

Governor Stephen S. Poloz discusses key issues involved in the Governing Council’s deliberations about the policy rate decision and the MPR.

This article provides an analysis of some recent banking regulatory initiatives that are likely to influence the activities of financial intermediaries and the effectiveness of central bank monetary policy implementation frameworks. Although the effects of individual regulations can be anticipated in most cases, the combined regulatory impact is not yet clear. Central banks should, however, be able to accommodate the effects of the emerging regulatory environment within their existing policy implementation frameworks.

How do unconventional monetary policies like quantitative easing and negative interest rates affect domestic financial conditions and the broader economy in small open econo-mies, such as Canada? These policies are effective in depreciating the exchange rate in small open economies, while lower interest rates are also passed through to the economy, albeit only partially. When conventional monetary policy is close to its limits, fiscal policy may be a more important complement to monetary policy in a small economy, particularly if global demand for safe assets compresses long-term interest rates.