christopher j waller : the time has come speech by mr christopher j waller, member of the board of governors of the federal reserve system, at the university of notre dame, notre dame, indiana, 6 september 2024. * * * thank you, eric, and thank you for the opportunity to speak to you today. 1 my topic is the outlook for the u. s. economy and the implications for monetary policy, a set of judgements that have, of course, been influenced by this morning's jobs report. when i scheduled this speech several months ago, i knew it might be challenging to speak a few hours after the release of such an important piece of data. but we like to say that monetary policy must be nimble, so that means policymakers must be nimble also. not simone biles nimble, but nimble. as you will hear, i believe the data we have received this week reinforces the view that there has been continued moderation in the labor market. in light of the considerable and ongoing progress toward the federal open market committee's 2 percent inflation goal, i believe that the balance of risks has shifted toward the employment side of our dual mandate, and that monetary policy needs to adjust accordingly. looking back at the economic data over the first six months of 2024, it portrayed an economy slowly cooling and not showing signs of significant weakening. the labor market had been gradually moderating for the past year or so, and although inflation rose in the first quarter, it then retreated in the second, and there was a widespread view heading into the second half of the year that the fomc was on track to achieve a much desired but unusual " soft landing. " then the july jobs report came in unexpectedly soft. job creation slowed and the unemployment rate increased by two tenths of a percentage point to 4. 3 percent, the highest since october 2021. there was speculation that weather - related issues might have distorted these results and, in fact, the unemployment rate ticked down in this morning's release. but, overall, the august report along with other recent labor data tend to confirm that there has been a continued moderation in the labor market. the ups and downs in the data over time highlight what i consider the right approach to meeting the fomc's dual mandate goals - i believe we should be data dependent, but not overreact to any data point, including the latest data. when we faced a period of banking instability in

able to weather major shocks such as the asian crisis, or last year ’ s global slowdown. indeed, over the period from 1997 to 2001, canada averaged annual economic growth of about 4 per cent, while the u. s. average was about 3. 5 per cent. and while the u. s. economy fell into recession last year, ours did not. although the productivity growth of canadian companies has not been as strong as that of firms in the united states, we have seen encouraging signs that investments in technology and training are leading to greater productivity gains here. indeed, business sector labour productivity in canada grew at an annualized rate of 2. 0 per cent from 1997 to 2001, much higher than the 1. 2 per cent average over the 1990 - 96 period, and only a bit below the revised 2. 3 per cent rate of productivity growth recorded in the united states. as we look forward, we see positive signs for future productivity growth in canada, thanks to the efforts of canadian firms to adjust to new technologies and incorporate them into their business processes. the shocks of 2000 - 2001 indeed, the economy has held up remarkably well when you consider that we have been hit with four major shocks during the past couple of years. first, there was the meltdown in the technology and telecommunications industries, which began in late 2000 and the effects of which are still being felt today. the second was the broader economic slowdown in 2001 that affected, to various degrees, the economies of most countries. third, and overshadowing every other event last year, was the 11 september terrorist attacks. with the first anniversary just passed, this seems like an appropriate time to reflect on the extraordinary events that have buffeted the north american economies since that terrible day, and to review how the bank of canada responded to those events. our most immediate responsibility was to keep canada ’ s financial system functioning. our next responsibility was to promote consumer and investor confidence. therefore, the bank of canada took extraordinary monetary policy action. on 17 september last year, we reduced our key policy interest rate outside our scheduled announcement dates. between september 2001 and january 2002, we lowered interest rates by a total of 200 basis points to help mitigate the impact of 11 september on an already - weakening economy. it turned out that consumer confidence in canada was not as badly shaken as had been feared. as the immediate geopolitical and economic uncertainties diminished, consumers responded strongly and quickly to the monetary stimulus. interest rate - sensitive sectors