CADCAD

Grant LynchGrant Lynch

Matt BennettMatt Bennett

Lainie ViLainie Vi

C AD E xc hang e R ate & C anadian Interes t R ate

0.9

1

1.1

1.2

1.3

1.4

1/3/

2007

1/24

/200

7

2/14

/200

7

3/7/

2007

3/28

/200

7

4/18

/200

7

5/9/

2007

5/30

/200

7

6/20

/200

7

7/11

/200

7

8/1/

2007

8/22

/200

7

9/12

/200

7

10/3

/200

7

10/2

4/20

07

11/1

4/20

07

12/5

/200

7

12/2

6/20

07

1/16

/200

8

2/6/

2008

2/27

/200

8

3/19

/200

8

4/9/

2008

4/30

/200

8

5/21

/200

8

6/11

/200

8

7/2/

2008

7/23

/200

8

8/13

/200

8

9/3/

2008

9/24

/200

8

10/1

5/20

08

11/5

/200

8

11/2

6/20

08

12/1

7/20

08

1/7/

2009

1/28

/200

9

2/18

/200

9

3/11

/200

9

4/1/

2009

4/22

/200

9

5/13

/200

9

6/3/

2009

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

C AD/US D C anada Int. R ate

C AD/US D and Interes t R ate Differenc e (C anda-US A)

0.8

0.9

1

1.1

1.2

1.3

1.4

1/3/

2007

1/31

/200

7

2/28

/200

7

3/28

/200

7

4/25

/200

7

5/23

/200

7

6/20

/200

7

7/18

/200

7

8/15

/200

7

9/12

/200

7

10/1

0/20

07

11/7

/200

7

12/5

/200

7

1/2/

2008

1/30

/200

8

2/27

/200

8

3/26

/200

8

4/23

/200

8

5/21

/200

8

6/18

/200

8

7/16

/200

8

8/13

/200

8

9/10

/200

8

10/8

/200

8

11/5

/200

8

12/3

/200

8

12/3

1/20

08

1/28

/200

9

2/25

/200

9

3/25

/200

9

4/22

/200

9

5/20

/200

9

Axis

Titl

e

-1.50%

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

C A D/US D

Differenc e

In 2000, the Bank of Canada adopted a system of eight pre-set dates per year on which it announces its key interest rate

Interest rate announcement Monetary Policy Report and Update

20-Jan 22 January (Update)

3-Mar ---

21-Apr 23-Apr

4-Jun ---

21-Jul 23 July (Update)

10-Sep ---

20-Oct 22-Oct

8-Dec  

This process includes an economic projection based on a model of the Canadian economy; an analysis of the information from monetary and credit aggregates, interest rate credit spreads, and changes in credit access; and information on the interest rate expectations of participants in financial markets.

Monetary Policy ReportsMonetary Policy ReportsMeeting Date Canadian Monetary Policy Report Update Interest Rate

1/18/2007 In line with the Bank’s outlook, the current level of the policy rate is judged, at this time, to be consistent with achieving the 2 per cent inflation target over the medium term.

Target rate for the overnight rate unchanged at 4.25 per cent on 5 December 2006 and 16 January 2007

5/26/2007 The current level of the target for theovernight rate is judged, at this time, to beconsistent with achieving the inflationtarget over the medium term.

The Bank left its key policy interest rate unchanged at 4.25 per cent on 6 March and 24 April.

7/12/2007 The Bank judges that the economy isnow operating further above its productionpotential than was projected at the time ofthe April Report

Bank of Canada raised its key policy interest rate to 4.5 per cent on 10 July

Monetary Policy Reports Monetary Policy Reports Cont.Cont.

Meeting DateMeeting Date Canadian Monetary Policy Report UpdateCanadian Monetary Policy Report Update Interest RateInterest Rate

10/18/200710/18/2007 Momentum in domestic demand is projected to remain strong, but net exports will exert more of a drag due to a weaker US outlook.

Canadian GDP is expected to grow by 2.6% in 2007, 2.3% in 2008, and 2.5% in 2009.

Core and total inflation are expected to return to 2% in the second half of 2008.

The current level of the target for the overnight rate is consistent with achieving the inflation target over the medium term.

1/24/20081/24/2008 Both core and total CPI inflation are projected to fall below 1.5% in mid 2008 before returning to 2% by the end of 2009

Effects of the slowing US economy will continue to add downward pressure on export growth.

Stimulus is needed to aggregate supply and demand in balance and to return inflation to target over the medium term

The Bank projects average annual growth of 1.8% in 2008 and 2.8 in 2009

4/24/20084/24/2008 Slowing global economic growth and ongoing financial market turbulence will have direct consequences for the Canadian economy Both core and CPI inflation are projected to be slightly below 2% in 2009 and return to 2% in 2010.

The risks around the Bank’s base-case project for inflation appear balanced.

GDP is projected to grow by 1.4% in 2008, 2.4% in 2009,and

3.3% in 2010

Monetary Policy Reports Monetary Policy Reports Cont.Cont.Meeting Date Monetary Policy Reports

UpdateInterest rate

4/15/20084/15/2008 Canadian GDP is projected to grow by 1.0 per cent in 2008, 2.3 per cent in 2009, and 3.3 per cent in 2010.

• Higher energy prices will push total CPI inflation temporarily above target, peaking in the first quarter of 2009

current levels of short-term interest rates incorporate no change in the target overnight rate by year-end.

10/23/200810/23/2008 • Growth in Canada will be sluggish through the first quarter of next year, then pick up over the rest of 2009

• Total CPI inflation is projected to fall below 1 per cent in mid-2009 before rising to 2 per

cent by the end of 2010. Core inflation will remain below 2 per cent

The policy rate has been lowered by a total of 75 basis points this month, 225 basis points since the beginning of December 2007

4/23/20094/23/2009 Canadian real GDP is projected to decline by 3.0 per cent in 2009 and to grow by 2.5 per cent in 2010 and by 4.7 per cent in 2011

After declines in 2009, core inflation and total CPI inflation are projected to gradually return to 2 per cent in the third quarter of 2011

The Bank lowered its policy rate to

¼ percent. conditional on the outlook for inflation, committed to hold the rate at that level until the end of the second quarter of 2010

Projection of Interest Rates Projection of Interest Rates for 2010 for 2010

Canada’s Bank will continue to keep interest Canada’s Bank will continue to keep interest rates low to stimulate the economy.rates low to stimulate the economy.

Net exports has shown less drag on the Net exports has shown less drag on the economy in 2008-2009, and then contributed economy in 2008-2009, and then contributed positive growth.positive growth.

Stronger global growth, improved credit Stronger global growth, improved credit conditions, and lagged effects on monetary conditions, and lagged effects on monetary policy actions show changes coming soon.policy actions show changes coming soon.