This is likely to be inflationary, even in a weak economy. Creating extra reserves lowers the effective short-term interest rate compared to the repo rate set by the MPC, whether demand in the economy is weak or not. The trick, therefore, is to figure out what the appropriate short-term rate for South Africa is.
The third is the overall effect on the Canadian economy of movements in the world prices of oil and non-energy commodities. In addition, there continue to be heightened geopolitical concerns. Paul and I will now be happy to take your questions. BIS Review 44/2004  1