CA: Bank of Canada Monetary Policy Report


Wed Oct 25 09:00:00 CDT 2017

Highlights
According to the BoC, inflation has picked up in recent months as anticipated in the Bank's July Monetary Policy Report (MPR). The pickup reflected stronger economic activity and higher gasoline prices.

Measures of core inflation have edged up, in line with a narrowing output gap and the diminishing effects of lower food prices. The Bank projects inflation will rise to 2 percent in the second half of 2018. This is a little later than anticipated in July because of the recent strength in the Canadian dollar.

The Bank is also mindful that global structural factors could be weighing on inflation in Canada and other advanced economies.

The Bank estimates that the economy is operating close to its potential. However, wage and other data indicate that there is still slack in the labour market. This suggests that there could be room for more economic growth than the Bank is projecting without inflation rising materially above target.

Definition
Since 2009 the Bank of Canada (BoC) has regularly updated its economic view via a quarterly Monetary Policy Report. This presents base-case projections for inflation and growth in the Canadian economy as well as an assessment of the risks. The forecast provides a platform upon which the monetary authority can base its decisions with regards to any changes in official interest rates (and/or unconventional monetary instruments).

Description
Each quarter, the MPR gives the financial markets a view of the BoC's governing council thinking. This provides important guidance especially since the BoC does not publish minutes from its policy setting meetings. The report is released at the same time as the policy announcement is made.