Then we have the closing of the output gap, which might lead to firms regaining some pricing power. Most analysts have been discussing our assumption of the closing of the output gap by end of 2017. Some people argue that the output gap cannot be closed with such high unemployment.
With the economy gathering momentum since then, persistent weakness in the Canadian dollar through June 1997 prompted a small increase in interest rates in order to offset an undesired further easing in monetary conditions.