BoC Monetary Policy Report April 2015

Global financial conditions have eased further in recent months, as many central banks have added to monetary policy stimulus in response to persis- tent economic slack and below-target inflation.

The effects of lower prices for oil and other commodities are working their way through the world economy, boosting overall global growth, but weakening growth prospects in some countries. All things considered, the Bank expects global economic growth to strengthen and average about 3 1/2 per cent over the 2015–17 period, in line with the January Monetary Policy Report (Table 1).

In this global context, the economic prospects of major economies continue to diverge. As the U.S. economy strengthens, the Federal Reserve is widely expected to start normalizing monetary policy later this year—in contrast to the ongoing easing in other advanced economies. The substantial strength- ening of the U.S. dollar against most other currencies, notably the euro,
the yen and the Canadian dollar, largely reflects such differences and, over time, will contribute to mitigating them by boosting net exports in the weaker economies.

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