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CANADIAN INDUSTRY ONLINE - AUGUST/SEPTEMBER 2012
current excess supply in the economy
is gradually absorbed, some modest
withdrawal of the present consider-
able monetary policy stimulus may
become appropriate, consistent with
achieving the 2 per cent inflation target
over the medium term. The timing and
degree of any such withdrawal will
be weighed carefully against domestic
and global economic developments.
OVERVIEW
OF
FINANCIAL
CONDITIONS
Despite the deterioration in
global financial conditions, the supply
and price of credit for businesses and
households in Canada remain very
stimulative, providing important on-
going support to the economic expan-
sion. Canadian financial markets have
remained resilient in recent months,
although they have been affected by
heightened risk aversion and volatil-
ity in global markets. Most notably,
the S&P/TSX Composite Index has
declined by roughly 10 per cent from
its first-quarter peak and volatility has
increased. Credit spreads on Canadian
corporate bonds have also widened
somewhat, although all-in yields have
fallen as yields on Canadian govern-
