a somewhat similar picture to the us. namely, the increase in aggregate uncertainty around inflation expectations was more pronounced at short - term horizons – say 1 or 2 years, compared to the longer - term horizon of 4 / 5 years. and while the increase in aggregate uncertainty reflected both an increase in disagreement among forecasters and an increase in individual uncertainty, disagreement across forecasters has now largely receded since the peaks of last year. that said, it is important to acknowledge two limitations : we do not yet fully understand how households and business form expectations nor how this maps into their actions. and the expectations channel should not lead to think that monetary policy works like a magical incantation : central bank credibility hinges on concrete actions and their impact on credit and demand. and this impact is tangible. various models developed by the ecb and the banque de france quantify the contribution of monetary policy to the disinflation, estimating that inflation would have been around 1 to 2 percentage points higher in 2023 in the absence of policy rate hikes. the impact in 2024 and 2025 would be even larger, due to the lags of monetary policy transmission. ii. will we succeed in the end? the last mile challenge so what now? shall we simply rest on our laurels and celebrate our success? certainly not. success is not ensured until the end, namely durable convergence around 2 % inflation. unexpected and exogenous shocks could arise along the road. and a number of observers and policy makers have expressed concerns that the last mile of 2 / 4 bis - central bankers'speeches disinflation might be more arduous. disinflation now needs to extend to the " core ", and primarily to services : it will therefore be different, they claim, harder, and with less tailwind from the base effects of energy disinflation. in economic terms, the phillips curve would not be linear and would be less favorable now, leading to a higher " sacrifice ratio ". but as far as the euro area is concerned, there is no serious evidence to support this fear of the " last kilometer ". admittedly, services inflation remains higher at 4 %. but it has started to fall after peaking at 5. 6 % in july 2023 ; historically, its average has generally exceeded the headline target of 2 %, but it is still compatible with it because of slower trend growth in goods prices ( which are now at 1. 1 % inflation ). moreover,

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