Monetary Policy Report Update – July 2008

Three major developments are affecting the Canadian economy: the protracted weakness in the U.S. economy; ongoing turbulence in global financial markets; and sharp increases in the prices of certain commodities - particularly energy. The first two developments are evolving roughly in line with expectations outlined in the April Monetary Policy Report. However, many commodity prices continue to outstrip earlier expectations, and this has altered the outlook for global and domestic inflation.