As in the past, this range is calculated from the expected annual capacity for growth of the non-mining sector of the economy, as contained in the ninth National Development Plan (NDP 9); it is also based on the desired level of inflation for the year, with an allowance for the process of financial deepening as the economy develops.
But if domestic demand was already rising rapidly, and the Canadian economy was operating at high levels, the spillover of strong US demand would have the potential to strain our production capacity and lead to higher inflation in the future.