by Stephen Gordon, Maclean’s

Canada’s economic recovery is expected to evolve largely as anticipated in the October Report, with the economy returning to full capacity and inflation to the 2 per cent target in the third quarter of 2011 [Monetary Policy Report, January 2010

]

…the Bank [of Canada] continues to expect that the economy will return to full capacity by the end of 2012 [Monetary Policy Report, January 2011]

…the economy is only anticipated to return to full capacity by the third quarter of 2013 [Monetary Policy Report, January 2012]

…the economy is now forecast to return to full capacity only in the second half of 2014 [Monetary Policy Report, January 2013]

…the Bank expects that the economy will gradually return to its full production capacity over the next two years [Monetary Policy Report, January 2014]

For four years, the Bank of Canada has been saying that the economy will return to potential—the level of activity where there are no inflationary or disinflationary pressures—over the two years following the publication of the forecast. The gap has not closed, and it continues to provide downward pressure on inflation, which has been below the Bank’s two per cent target for the past 18 months.