achieve its inflation target of 2 per cent cpi inflation. a more subtle approach is now warranted. the bank must balance the competing influences on canadian activity and inflation of momentum in domestic demand and the increasingly uneven global recovery. in recent months, as the need for emergency settings of monetary policy was passing, the bank gradually reduced the degree of monetary stimulus. in april, we ended our conditional commitment, which in itself represented a tightening of monetary conditions. 7 at the start of this month, the bank raised its target overnight rate to 50 basis points and re - established the normal functioning of the overnight market. these decisions leave considerable monetary stimulus still in place, consistent with the large degree of excess supply in canada, the strength of canadian spending, and the uneven global recovery. given the ongoing uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global developments. in light of the scale and volatility of these conflicting forces, it should be evident that no particular path for monetary policy is preordained. conclusion in conclusion, now is not the time to rest on our laurels. public and private boldness, both at home and abroad, will be required to secure the recovery. this means g - 20 action to reform the global financial system and to secure a sustainable recovery. this means investments by our businesses to improve productivity and to gain new markets. this means canadians should fully engage the new multi - polar global economy. r. b. zoellick, president the world bank group, “ the end of the third world? modernizing multilateralism for a multipolar world, ” speech delivered to the woodrow wilson center for international scholars, april 14, 2010, available at : < http : / / web. worldbank. org >. see bank of canada, “ framework for conducting monetary policy at low interest rates, ” monetary policy report, april 2009, available at : < http : / / www. bankofcanada. ca / en / mpr / pdf / 2009 / mpr230409. pdf >. these are all big decisions. how quickly and how effectively they are taken will influence activity and inflation in canada and, therefore, the stance of monetary policy. the bank will need to be agile. the bank will maintain its unwavering commitment to price stability. the single, most direct contribution that monetary policy can make to sound economic performance is to provide canadians with confidence that their money will retain its

mark carney : fortune favours the bold remarks by mr mark carney, governor of the bank of canada, to the greater charlottetown area chamber of commerce, charlottetown, prince edward island, 16 june 2010. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system ’ s website. * * * it is a pleasure to be here. in this birthplace of confederation, courageous decisions were made here to found our great nation. similar boldness, both in canada and globally, is again required. to explain why, i would like to touch upon the recent past, the present outlook, and our challenging future. the recent past : the recession in context from the end of 2008 to the middle of last year, canada experienced a short, sharp recession. with the exception of government spending, all major components of aggregate demand declined, and industrial production dropped 15 per cent. canadian exporters suffered particularly, owing to the sharp fall in the components of u. s. economic activity that matter most for canada. for example, u. s. demand for motor vehicles fell by more than half and housing starts by two - thirds. partly as a result, several major canadian industries are now undergoing deep restructurings. the recession had a considerable impact on employment. some 400, 000 canadians lost their jobs, and our unemployment rate spiked by almost 3 percentage points to its highest level in more than a decade. although the labour market is clearly improving, with threequarters of the jobs lost now recovered, too many canadians who want to work are still out of a job, and many of those still employed are working fewer hours than they would like ( see appendix chart 1 ). as painful as our recession was, canada suffered less than most other advanced economies. consumption, housing, and employment in canada all held up substantially better than in the united states. the cumulative fall in canadian real gdp of 3. 3 per cent compares with declines of 3. 6 in the united states, about 5 per cent in the euro area, and more than 8 per cent in japan. canada ’ s better performance can be explained by two factors. first, with a highly credible monetary policy and the strongest fiscal position in the g - 7, canadian policy - makers were able to respond swiftly and effectively with extraordinarily accommodative measures. the bank of canada began cutting interest rates in december 2007 and pursued an aggressive series of reductions until our policy rate