Growth in the first half of 2006 appears to have been a little stronger than projected, and the Canadian dollar has traded in a higher range than was envisaged in the April MPR. The economy is currently judged to be operating just above its production capacity.
Growth in 2007-08 is expected to be a little weaker than was anticipated in the April MPR, owing primarily to the lagged effects of the higher Canadian dollar. With some anticipated moderation in U.S. growth, combined with past interest rate and exchange rate increases, the Canadian economy is projected to return to its production capacity by the end of 2008.