Heightened tensions in currency and capital markets could result in a more protracted and difficult global recovery. These, too, are developments that the FOMC must monitor carefully. Responsible monetary policy in the current environment requires attention not only to nearterm macroeconomic conditions, but also to corollary risks with long-term effects.
If we consider the direct effects of the attacks, their immediate impact on consumer and business confidence, and adjustments to address increased security risks, the Bank expects that output growth in Canada will be close to zero or slightly negative in the second half of 2001. For all of 2001, this implies growth of about 1½ per cent.