years, the bank has been conducting analysis and research related to the canadian financial system, much of which has been published in the bank of canada review, and in technical reports and working papers. we are now prepared to take a further step in the interest of making the information about our financial system more widely available. i am pleased to announce that the bank of canada will introduce a new semi - annual publication, the financial system review ( fsr ). we are planning for the first issue to be available late next month. in it, we will publish some of the bank's ongoing work in monitoring financial system developments and analyzing the direction of financial sector policy. the fsr aims to promote knowledge of, and discussion about, changes and developments in the canadian financial system. i would point out that we are not the only central bank to publish such a document. for example, the bank of england, the swedish riksbank, and the international monetary fund also produce similar reports. promoting economic welfare through inflation control while we work to promote financial stability in conjunction with other agencies, we alone are responsible for monetary policy. the foundation for that policy is the inflation - targeting system. how this system works may be familiar ground for some of you, but it is worth discussing again, especially during these uncertain economic times. the bank of canada act calls on us " to promote the economic and financial welfare of canada. " we want strong and sustainable economic and employment growth. the best way we can help to achieve that is to promote confidence among canadians in the future purchasing power of their currency. in other words, we want canadians to be confident that inflation will remain low, stable, and predictable. for over a decade, following a joint agreement with the federal government, the bank has operated with a system of inflation - control targets. under the current terms of the agreement, the bank aims to keep the trend of consumer price inflation at the 2 per cent midpoint of a 1 to 3 per cent range. since we instituted the agreement, inflation expectations have become firmly anchored on our 2 per cent target. well - anchored expectations promote economic growth and stability. why? investors can better assess the future value of their investments. savers can be more confident that their future purchasing power will not be unexpectedly eroded by inflation. debtors can better assess the real burden of their interest payments. wage and financial contracts can be set for longer terms. all of this is possible because people are confident that inflation will stay around 2 per

stephen s poloz : opening statement before the standing senate committee on banking, trade and commerce opening statement by mr stephen s poloz, governor of the bank of canada, to the standing senate committee on banking, trade and commerce, ottawa, ontario, 20 april 2016. * * * good morning, mr. chairman and committee members. senior deputy governor wilkins and i are happy to be back to discuss the bank ’ s monetary policy report ( mpr ), which we published last week. it has been 18 months since carolyn and i were last here. and it was about that time, in the fall of 2014, when the canadian economy first started to feel the effects of a massive shock to our terms of trade, brought about by a sharp drop in the price of oil and other commodities. because canada is such an important producer of resources, particularly oil, this shock was a major setback. it set in motion a difficult adjustment process that has been very disruptive for many canadians. investment and output in resource industries have fallen precipitously, the decline in national income has curbed household spending and the resource sector has seen significant job losses. these negatives have clearly outweighed the benefits of lower energy costs for households and businesses. from a monetary policy perspective, the shock posed a two - sided threat to our economy last year. first, it was a clear downside risk to our ability to reach our inflation target. second, by cutting into national income, it worsened the vulnerability posed by household imbalances as seen in our elevated debt - to - income ratio. to address both threats and to help facilitate the necessary economic adjustments, we lowered our policy interest rate twice last year, bringing it to 0. 5 per cent. while we recognized the possibility that this reduction could, at the margin, exacerbate the vulnerability posed by household imbalances, the more important effect of lowering the policy rate last year was to cushion the drop in income and employment caused by lower resource prices. another natural consequence of the shock to our terms of trade has been a decline in the canadian - dollar exchange rate. it ’ s important to note that this is not unique to canada. indeed, many resource - reliant countries have seen similar depreciations in their currencies. both our policy moves and the lower currency have been helping to facilitate the economic adjustments, which have been playing out over two tracks. while weakness has been concentrated in the resource sector, the non