consumers, business people, savers, and investors. it means that they should be able to go about their affairs confidently, knowing that they can count on their central bank to do whatever is necessary to keep future inflation low, stable, and predictable. in this way, they will be able to make sounder economic decisions, which will lead to better overall economic performance and rising incomes. over the past several years, the canadian economy has experienced low and stable inflation and a strong rate of expansion. moreover, economic activity has been less variable than in the 1970s and 1980s, even though we had to face some important economic shocks, such as the mexican and the asian crises. employment and personal incomes have risen, and business investment in machinery, equipment, and new technology has increased very substantially, particularly since 1996. at the same time, low inflation has encouraged canadian businesses to operate more efficiently and to focus on cost control and productivity improvements. that is quite a change from our experience in the 1970s and 1980s. that experience amply demonstrated what a terrible price the economy and the people pay for high, unstable, and unpredictable inflation. i am thinking here of the increased uncertainty about the future, the distortion of vital signals and information that people rely on to make important decisions, the ups and downs in output and employment, and the waste of valuable economic resources as they are diverted from productive investments to speculative activities. all of this should be enough to strengthen our collective resolve not to let inflation break out again. and it convinces me that the focus of canadian monetary policy since the early 1990s on low and predictable inflation as an essential building block of a productive, well - functioning economy has been exactly right. while low inflation is a necessary condition for good economic performance, it is not sufficient by itself. other factors are also crucial. clearly, it is very important that we all continue to work to improve the structure of our economy and the skills of our labour force, and to ensure that our product and labour markets operate efficiently. it is also critical that over the next decade all levels of government continue to focus on reducing their net indebtedness to lessen canada's vulnerability to external shocks and to prepare for the pressures we will face with the projected decline in our working - age population. canada's monetary policy approach : inflation - control targets and a flexible exchange rate let me now turn to the role of the inflation - control targets and the floating exchange rate in canadian monetary policy. explicit inflation - control targets were jointly

tiff macklem : opening statement before the house of commons standing committee on finance opening statement by mr tiff macklem, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 30 october 2023. * * * good afternoon. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report. last week, we maintained our policy interest rate at 5 %. we held our policy rate steady because monetary policy is working to cool the economy and relieve price pressures, and we want to give it time to do its job. but further easing in inflation is likely to be slow, and inflationary risks have increased. before i take your questions, let me give you some economic and financial context for the decision. since the last time we were here with you, the canadian economy has slowed, and the data suggest demand and supply are now approaching balance. we're now seeing clearer evidence that higher interest rates are moderating spending and relieving price pressures. the economy has entered a period of weaker growth, with growth averaging about 1 % over the last year. growth in gross domestic product ( gdp ) is forecast to remain below 1 % for the next several quarters before picking up in late 2024 and rising to 2½ % in 2025. with the economy expected to move into excess supply this year and with growth anticipated to be weak for the next few quarters, we think there's more inflation relief in the pipeline. we expect inflation in canada to ease gradually and return to our 2 % target in 2025. but we're worried that higher energy prices and persistence in underlying inflation are slowing progress. the effects of higher interest rates on inflation are most evident in the prices of durable goods, like furniture and appliances that people often buy on credit. these effects have also spread to many semi - durable goods - a category that includes things like clothing and footwear - as well as many services excluding shelter. inflation in these categories is now running generally at or below 2 %. price increases for groceries, while still elevated at almost 6 %, have also eased and are expected to moderate further. however, a number of factors are getting in the way of low inflation. higher global energy prices are increasing prices at the pump. and that is pushing headline inflation back up. structural supply shortages in our housing market are boosting prices for shelter. in addition, near