Low interest rates present a challenge for the traditional ways of conducting monetary policy. That is especially true in recessions when, in the past, the Federal Reserve has typically cut interest rates by 4 to 5 percentage points in order to support household spending and business investment.
Because Canada is so open to world trade and finance, we need to understand these changes so that we can manage our economy appropriately and take advantage of new opportunities. World economic growth has been remarkably strong over the past three years, averaging close to 4 1/4 per cent, and it is expected to stay around 4 per cent this year and next.