(March 23 – 16:45 ET) – The Bank of Canada released its annual report today, highlighting a remarkable year in the economy.
The BOC report says that the Canadian economy was strong in 1999 thanks to sustained expansion in the U.S., bolstered by a global recovery and a commodity price rebound. Inflation stayed within the Bank’s 1% to 3% target range. The Bank is carefully trying to manage a repeat of that performance this year.
In his statement, Bank Governor Gordon Thiessen says, “Our low-inflation environment and the Bank of Canada’s commitment to maintaining it give us more room than we have had for some time to explore the economy’s full potential. However, because of the current strong momentum of the economy and the high levels of activity, the Bank must be careful to avoid approaching capacity limits too rapidly.” He reiterated that the Bank will take a gradual approach to raising rates in view of the fact that monetary policy changes take some time to impact behavior.
Thiessen also maintains his stance favouring a floating exchange rate, challenging currency unification advocates to present a more compelling case in favour of a North American currency, or a move to the U.S. dollar. He blesses free floating rates and the Bank’s low inflation policy for the current economic expansion.