Bank of Canada
                         Indicators of Capacity and Inflation Pressures for Canada
              Updated: 19 October 2006          Page 3          Next release: 7 December 2006

                           Real estate market (year-over-year percentage change)
============================================================================================================
                  2004Q4  2005Q1  2005Q2  2005Q3  2005Q4  2006Q1  2006Q2  2006Q3  2006Q4  Latest data
============================================================================================================

New-housing
price index       5.4     5.1     4.7     4.7     5.6     7.0     9.1                     12.1Aug

Resale-housing
prices: Royal
Lepage            5.7     6.2     6.6     6.8     7.3     8.3     9.6                     9.6Q2

Vacancy rate
  apartments (%)  2.7                             2.7                                     2.7Oct

  offices (%)     10.6    10.3    9.5     8.9     8.2     7.4     7.1                     7.1Q2

  industrial
  market (%)      4.9     4.5     4.5     4.6     4.4     4.3     4.3                     4.3Q2

                              Expectations (year-over-year percentage change)
============================================================================================================
                  2004Q4  2005Q1  2005Q2  2005Q3  2005Q4  2006Q1  2006Q2  2006Q3  2006Q4  Latest data
============================================================================================================

Business Confidence Survey (Conference Board)
% of firms expecting price increases over the next six
months of:
  1% or less      14      22      10      7       8       9       13      13              13Q3

  2% or less      74      57      65      37      49      52      58      63              63Q3

  3% or less      96      92      93      84      88      95      93      95              95Q3

  more than 3%    4       7       5       16      12      4       5       5               5Q3

CPI inflation: Consensus Forecasts
  2006                    1.9     1.9     2.1     2.3     2.0     2.0     2.1             2.2Sep

  2007                                                    1.8     1.8     1.8             1.9Sep

  2-3 years       1.9             1.9             2.0             2.0                     2.0Apr

  6-10 years      2.0             2.0             2.0             2.0                     2.0Apr

Bank of Canada Regional Office Survey
% of firms expecting CPI inflation over
the next two years to be:
  less than 1%    0       0       1       0       0       2       0       0               0Q3

  1-2%            29      33      18      10      14      15      15      15              15Q3

  2-3%            56      60      68      60      61      63      61      63              63Q3

  more than 3%    12      4       7       27      19      18      22      20              20Q3

Expectations implicit in
real/nominal
bond spread       2.7     2.7     2.6     2.4     2.6     2.7     2.7     2.6     2.4     2.4Oct



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