year period of growth slightly above 7 %. the second is in the pre - crisis high - growth phase, when inflation around the middle of a five - year period of growth averaged over 8. 5 %. the third is in the post - crisis period, when rising inflation accompanied the recovery from a growth of 6. 8 % in 2008 – 09, the trough of the crisis, to 8 % in the following year. two important implications for the future of monetary policy can be drawn from these three episodes. first, nirg is not a long - term constant. it can change over relatively short periods of time, as it did from about 7 % to about 8. 5 % in less than a decade, between the first and second episodes. importantly, in the transition out of the crisis, when the growth rate accelerated from its low 6. 7 % in 2008 – 09 to 8 % in 2009 – 10 and, further, to a currently estimated 8. 5 % in 2010 – 11, bis central bankers ’ speeches inflationary pressures quickly became quite strong. this might suggest that nirg is now closer to 8 %. second, the increase in nirg from 7 % to 8. 5 % seems to have been accompanied by a sharp rise in the investment - gdp ( gross domestic product ) ratio and a steady decline in the fiscal deficit - gdp ratio. the former suggests that as new capacity is created in the economy, its ability to grow faster without spurring inflation increases. the latter suggests that for a given rate of growth, the composition of spending also matters. chart 1 : growth and inflation less government borrowing appears to be associated with a rising nirg, perhaps because it creates more space for investment. of course, more analysis of these relationships is warranted, but they do suggest that monetary policy will have to take the overall composition of expenditure into account while assessing nirg, which in turn will influence the policy stance. impact of energy prices for energy - importing economies such as china and india, monetary policy is going to be influenced by global oil price movements as long as oil remains the predominant incremental source of energy. the same arguments hold for other important commodities as well, but energy is likely to be the most important factor, so i shall focus on it. chart 2 demonstrates how important energy prices and their rate of inflation are to domestic inflation. during the economy ’ s pre - crisis high - growth phase, the crude oil price, though rising, was doing so relatively

nicolas vincent : monetary policy decision - making - behind the scenes remarks by mr nicolas vincent, deputy governor of the bank of canada, at the chamber of commerce of sherbrooke, quebec, 19 september 2024. * * * introduction good morning. it's a pleasure to be here with you today. i've done a lot of hiking, camping and skiing in the eastern townships. but this is the first time i've had a chance to spend time in sherbrooke. i'm very much looking forward to spending the next two days in your lovely city. as bruno mentioned, i'm a professor at hec montreal and an external deputy governor of the bank of canada. as an external deputy governor, i am a full member of governing council. i participate in all discussions related to monetary policy and financial stability. the bank's aim in creating an external, part - time role was to get new perspectives from someone who isn't from the world of central banks but still knows a thing or two about economics. thankfully, my teaching experience and academic research have come in quite handy in my role at the bank, as has my early - career work in the public service. even with my experience, however, i've had to learn a lot since joining the bank in march 2023, particularly about the process involved in making interest rate decisions. at the beginning of september this year, in light of recent progress in the fight against inflation, the bank announced a third consecutive cut of 25 basis points, bringing the policy rate to 4¼ %. it will likely come as no surprise to any of you that it's more pleasant to announce cuts than it is to announce increases. in recent years, decisions by the bank have been the subject of much attention, interest and debate. this is to be expected. the decisions have an impact on everyone, in many different ways, and we are well aware of that. we know that households are worried about the cost of living, their mortgage loan renewal, house prices, rent and the fact that it is getting harder to find a job. given the importance of our decisions, they must not be taken lightly. and having been at the bank for 18 months now, i can confirm that they are not. interest rate decisions are based on an enormous amount of analysis and reflection. but how are decisions reached? what does the process look like exactly? since becoming deputy governor, i have often been asked such questions