Two representative grounds for this argument are the non-linearity of the Phillips Curve, implying that under conditions of economic slack the influence of economic conditions on prices could temporarily decline, and the time lag between economic activities and their effects on prices.
The Bank expects Canada's economy to grow by about 2 1/2 per cent in 2005 and 3 1/4 per cent in 2006, with growth this year and next coming primarily from strength in domestic demand. To continue to support aggregate demand, we decided to leave the target for the overnight rate unchanged at 2.5 per cent on 12 April.