lawrence schembri : monetary policy framework issues - toward the 2021 inflation - target renewal remarks by mr lawrence schembri, deputy governor of the bank of canada, at the bank of canada workshop " monetary policy framework issues : toward the 2021 inflation - target renewal ", ottawa, ontario, 14 september 2017. * * * good morning everyone, et bonjour a tous. bienvenue a la banque du canada. je m ’ appelle larry schembri. je suis un sous - gouverneur ici a la banque. it is a great pleasure for me to open this workshop on issues central to the monetary policy framework and its implementation. given the significant challenges central banks have faced in achieving their monetary policy goals since the global financial crisis, this is a propitious moment to step back and re - examine these fundamental issues from a variety of perspectives. as many of you know, the current monetary policy framework in canada consists of two components : a consumer price index ( cpi ) inflation target of 2 per cent, the midpoint of a control range of 1 to 3 per cent ; and a flexible, market - determined exchange rate. while the second component has been in place for almost 60 of the past 70 years, our inflationtargeting regime was implemented in 1991 and the current specification has existed since 1995. this framework has served canada well in the face of significant movements in commodity prices and canada ’ s terms of trade, as well as other shocks, including the great recession. inflation has averaged just below 2 per cent since we implemented the target, and both output growth and inflation have been much more stable relative to before 1991. in addition, two important features of our inflation - targeting regime have drawn favourable international recognition : first, the price stability policy goal of the regime is founded on a joint agreement between the bank of canada and the government of canada ; and second, the agreement is reviewed regularly on a five - year basis. the joint agreement with a democratically elected government enhances the legitimacy of the price stability objective and thereby boosts its credibility. it also gives the bank of canada operational independence to achieve this goal. the regular five - year review, meanwhile, affords the bank the opportunity to revisit many important aspects of our monetary policy framework and its implementation. while the framework has worked well in the past, improvements should always be considered — especially given the changing economic environment, the lessons learned from experience in canada and elsewhere, and

about financial stability, fiscal space and central bank independence. and, looking ahead, new financial technologies could affect the implementation and transmission of monetary policy. so, we are most fortunate to have with us today a very distinguished group of speakers to enlighten us with their thinking on these and other challenging issues. please let me close by thanking them, and all conference participants, especially those who have come some distance to be with us today. it promises to be a very stimulating workshop, and my colleagues and i are very much looking forward to listening and discussing with you. bonne journee. 2 / 2 bis central bankers'speeches