Canada's inflation numbers continue to reflect the impact of higher-than-expected prices for crude oil and natural gas, further increases in auto insurance premiums, and price pressures in certain sectors, such as housing, food, and some services. This higher inflation also suggests an underlying firmness in the price-setting environment. Relative price increases wouldn't be pushing up trend inflation if there was not sufficient demand.
So, in making our latest interest rate decision on 4 March, we weighed not only domestic inflation pressures and the expectation that Canadian economic activity will remain near potential in 2003, but also the stimulative stance of monetary policy and improved conditions in capital markets.