A more subtle approach is now warranted. The Bank must balance the competing influences on Canadian activity and inflation of momentum in domestic demand and the increasingly uneven global recovery. In recent months, as the need for emergency settings of monetary policy was passing, the Bank gradually reduced the degree of monetary stimulus.
In April, we ended our conditional commitment, which in itself represented a tightening of monetary conditions. 7 At the start of this month, the Bank raised its target overnight rate to 50 basis points and re-established the normal functioning of the overnight market.