News

The last time that Paul and I appeared before this committee was after the release of our April Report. At that time, inflation was well above its 2 per cent target, and short-term inflation expectations had edged up. Although inflation was being pushed up by special factors, there were also signs that strong domestic demand was working to broaden pressures on prices.

Since the April Monetary Policy Report, the Canadian economy has been hit by a number of unusual shocks: SARS, BSE, the Ontario electricity blackout, and the severe forest fires in British Columbia.

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 2 3/4 per cent.

Bank of Canada Governor David Dodge said today that substantial progress has been made in building investor and consumer confidence in the face of recent economic shocks and corporate finance and accounting scandals.

It's great to be back in Vancouver and to renew acquaintances at the Board of Trade. I'm going to spend some time today discussing the Bank of Canada's outlook for the Canadian economy and inflation, and how we are responding. But in order to understand the current economic situation, we need to look at some of the extraordinary events of the past year or so and how those events have affected the economy.