mark carney : summary of canada ’ s january 2013 monetary policy report opening statement by mr mark carney, governor of the bank of canada and chairman of the financial stability board, presented to the house of commons standing committee on finance, ottawa, ontario, 12 february 2013. * * * good morning. tiff and i are pleased to be here with you today to discuss the january monetary policy report, which the bank recently published. • while the global economic outlook is slightly weaker than the bank had projected in october mpr, global tail risks have also diminished. • the economic expansion in the united states is continuing at a gradual pace, restrained by ongoing public and private deleveraging, global weakness and uncertainty related to fiscal negotiations. • europe remains in recession, with a somewhat more protracted downturn now expected than in october. • growth in china is improving, though economic activity has slowed further in some other major emerging economies. • supported by central bank actions and by positive policy developments in europe, global financial conditions are more stimulative. • commodity prices have remained at historically elevated levels, though temporary disruptions and persistent transportation bottlenecks have led to a record discount on canadian heavy crude. • in canada, the slowdown in the second half of 2012 was more pronounced than the bank had anticipated, owing to weaker business investment and exports. • caution about high debt levels has begun to restrain household spending. • the bank expects economic growth to pick up through 2013. • business investment and exports are projected to rebound as foreign demand strengthens, uncertainty diminishes and the temporary factors that have weighed on resource sector activity are unwound. • nonetheless, exports should remain below their pre - recession peak until the second half of 2014, owing to a lower track for foreign demand and ongoing competitiveness challenges, including the persistent strength of the canadian dollar. • consumption is expected to grow moderately and residential investment to decline further from historically high levels. the bank expects trend growth in household credit to moderate further, with the debt - to - income ratio stabilizing near current levels. • relative to the october mpr, canadian economic activity is expected to be more restrained. following an estimated 1. 9 per cent in 2012, the economy is expected to grow by 2. 0 per cent in 2013 and 2. 7 per cent in 2014. the bank now expects the economy to reach full capacity in the second half of 2014, later than anticipated in october. • core inflation has softened

of the analysis of policy issues relating to financial regulation and supervision, financial stability arrangements ( e. g. financial crisis management and resolution ) and other financial services areas ( e. g. accounting ). this work encompasses the regular monitoring and assessment of developments in these areas as well as contributing to european and international discussions on regulatory and supervisory issues. this three - pronged approach allows us to focus on the distinct but complementary activities related to financial stability surveillance, systemic risk assessment and policy responses, respectively, while still ensuring that interlinkages between these elements are considered in bis central bankers ’ speeches an integrated manner when providing financial stability advice to the decision - making bodies of the eurosystem, the european systemic risk board and to the wider public. the ecb financial stability review is only one example of product where the three elements are developed. we are living difficult times and need state of the art tools and indicators for analysis. as mentioned before, we are currently living in an extremely complex and difficult macroeconomic situation. the financial crisis, if anything, revealed that we need to understand much better the interactions between the financial and real economic sectors. particularly, the concepts and analytical tools underlying financial stability and macro - prudential analysis were found somewhat deficient to properly guide policymakers trying to steer through the crisis. this has underlined the need for “ state - of - the - art ” tools and indicators for conducting financial stability analysis. indeed, especially during the past five years the academic research has very much enhanced the analytical toolbox that we have available to properly analyse and assess the pertinent financial stability issues of the day. further enhancements are, of course, needed and i can only encourage the academic community to continue in this direction as it will greatly help policy makers when trying to understand and ultimately address financial stability issues of a systemic nature. also in this light, it is my expectation that today and tomorrow ’ s conference will provide us with cutting - edge research in the financial stability area ; thus providing a highly useful stock taking of the progress made in recent years, while ideally also pointing towards areas where further improvements are still needed. need to rethink also policies and policy frameworks the conference will conclude with a panel discussion on macro - prudential policies. key questions in this area include the translation of systemic risk analysis into concrete policy actions and the related challenge of developing a well - functioning macro - prudential policy toolkit. in this regard, we have to ensure that once