The flip side of this coin are financial stability concerns arising predominantly from the substantial lack of transparency. Even if comprehensive data on hedge funds’ assets under management were available, we would still have a hard time assessing the true economic risk they carry. For they typically make extensive use of derivatives and hold leveraged positions, not least in rather illiquid markets.
The Update reviews economic and financial trends in the context of Canada’s inflation-control strategy. Three developments have led us to modify our outlook for economic growth and inflation in Canada, since our October Monetary Policy Report.