Against this backdrop, the global trade conflict has had a meaningful negative effect on world trade and on business confidence and investment. The damaging effects of trade conflict are only partly offset by easier monetary policy. Since our last full forecast presented in our October Monetary Policy Report (MPR), the trade news has been mixed.
The Canada-US-Mexico trade agreement appears to be close to ratification. For most of the period, headlines have suggested progress in the trade conflict between the United States and China, although there continue to be many twists and turns. Financial markets, already strongly supported by central bank actions, have been reacting to trade news.