john hurley : schools ’ information pack on price stability speech by mr john hurley, governor of the central bank and financial services authority of ireland, at the launch of the schools ’ information pack on price stability, dublin, 24 january 2006. * * * a aire agus a dhaoine uaisle. dia dhibh go leir agus cead mile failte romhaibh go dti an banc ceannais. minister, president of the business studies teachers association and guests, you are all very welcome to the central bank. i am delighted that you could be with us today as we launch this new schools ’ information pack, price stability : why is it important to you. i am particularly happy to also welcome the students and their teachers today from marian college, st. mary ’ s cbs, st. vincent ’ s secondary school, scoil caitriona and st. mary ’ s college. they have come from various parts of the country to be with us today. i hope you ’ re not missing too many important classes as a result! developed by the european central bank and the 12 national central banks of the euro area, including, of course, our own central bank, this is a unique initiative. for the first time, the central banks of the euro area have produced a single cross - border education pack. it is being distributed to 50, 000 secondary schools, not only in ireland, but throughout the 12 countries that share the euro as their currency. i would like to say at the outset that i am delighted that the central bank has an opportunity to be involved in this way with the education of irish students on issues which are relevant in all our lives. while setting monetary policy and ensuring price stability may not seem on the surface to be one the most interesting of topics for young adults, i can assure you that it has a significant impact on the lives of each and every one of the 300 million people of the euro area. this information pack, i hope, helps to make it a little more interesting than you might expect and maybe even a little bit enjoyable, if that is possible! now, i ’ m sure that many young students will probably think, “ well, price stability is not actually that important to me … ” but in fact, stable prices and low inflation are a guarantee that your pocket money or savings from your summer or weekend jobs can buy you the things you want throughout the year. stable prices also help promote economic growth and

, and we expect the economy will gather strength over the next couple of years. the complex adjustment to canada ’ s terms of trade shock is playing out over two tracks. in the resource sector, we see firms cutting production and investment. we are also seeing spillovers into other areas of the economy. it ’ s not surprising that car sales and housing markets in energy - producing regions aren ’ t doing as well as those in other regions. we estimate that the oil price shock, on its own, took about 1 1 / 4 percentage points off gdp growth in the first half of the year. at the same time, canada ’ s non - resource economy is doing much better. table 4 in the mpr shows that retail sales, housing starts and labour markets are showing solid strength outside of the energy - intensive provinces. non - energy exports are also showing encouraging signs. you ’ ll recall that in july we were puzzled because non - energy exports had faltered by more than would have been expected given developments in the united states. so bank staff have updated the analysis that they did last year by looking at more than 4, 000 export categories. this work was posted today on our web site. it shows that categories of exports that were expected to lead the recovery – such as building materials and fabricated metal products – have grown strongly in recent months, and new sources of export growth are emerging. bis central bankers ’ speeches while it ’ s clear that there are risks to our outlook, the bottom line is that economic momentum is building in canada. real gdp growth should increase over the next two years, although by less than we forecast in july. lower commodity prices and the drop in energy - related business investment are acting as significant drags. at the same time, stronger u. s. demand, a lower canadian dollar and the monetary stimulus we added earlier this year are all having a positive effect on growth. governing council considered carefully the implications of the commodity price shock on potential output because it is important to gauging the outlook for inflation. potential output growth – the sustainable rate of non - inflationary growth – is a tricky thing to estimate under normal circumstances. it is even more so now, due to the adjustments in investment and jobs that are underway. overall business investment has been revised sharply lower. this is because investment in the resource sector is being reduced faster than it is growing in the nonresource part of the economy. this means that, over the near term, potential output is likely to