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Canada’s economy is projected to grow by 1.7 per cent in 2016 and return to potential next year as complex adjustments continue.

This paper examines factors that affect the transmission of fluctuations in global agricultural commodity prices to domestic food inflation.

Bankers’ Acceptances (BAs) will no longer be issued by the major Canadian banks after the cessation of the Canadian Dollar Offered Rate’s (CDOR) publication in June 2024.

The global economy has continued to grow at a robust pace since the July Monetary Policy Report Update.

This document provides an overview of Lynx—Canada’s high-value payment system—and summarizes the system’s design. It explains the development and purpose of Lynx as well as the legal and regulatory framework governing its operation. It also describes the various settlement mechanisms and processes Lynx uses to allow system participants to meet their diverse payment needs while ensuring that risks that arise in the system are managed appropriately.

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

Changes in domestic interest rates affect the value of the Canadian dollar less than changes in the risk premium do. These variations often occur when a broad shift in risk sentiment occurs in global markets. Ultimately, the value of the currency reflects long-term, slow-moving features of the economies.

This article compares different measures of real short-term interest rates for Canada over the period from 1956 to 1995. A new measure for the expected real interest rate is constructed using a proxy for inflation expectations that is based on the properties of past inflation. The history of inflation in Canada suggests that the characteristics of inflation have changed considerably over time. Past inflation can be characterized by three different types of behaviour: an environment in which average inflation is low and shocks to inflation have only temporary effects; an environment of moderate inflation with more persistent disturbances; and an environment of drifting inflation in which shocks have permanent effects on the level of inflation. The proxy for inflation expectations uses a statistical model, called a Markov Switching Model, to take account of changes in the behaviour of inflation over time. It is found that uncertainty about the changing characteristics of inflation behaviour leads to uncertainty about estimates of inflation expectations and thus about measures of real interest rates. Target ranges for keeping inflation low should help reduce the uncertainty about inflation behaviour. The behaviour of inflation and interest rates suggests that the credibility of the Bank of Canada's inflation-control objectives is growing. This should reduce inflation uncertainty and lead to lower nominal interest rates over time.

Results from the Business Outlook Survey and the Business Leaders’ Pulse reveal that firms’ outlooks and intentions remain subdued despite a gradual improvement in sentiment. Expectations for growth in domestic and export sales are still soft. Most firms do not plan to increase staffing, and investment intentions are restrained. While businesses continue to expect cost increases from tariffs and trade uncertainty, weak demand limits their ability to pass these costs through to prices. One-year-ahead inflation expectations remain below the peak reached earlier in the trade conflict.