we will be watching closely to see how the economy responds to higher interest rates. we ’ re not on autopilot. we will be looking for signs that the economy is returning to balance. just as canadians trusted us to respond with strength and conviction when the economy needed support at the onset of the pandemic, they are counting on us now to lower inflation. we take that trust seriously. we have the tools, we have the track record, and we are committed to getting inflation back to target. let me stop here. you ’ ve been an attentive audience, but an important part of being transparent and accountable is listening, and taking questions. so that ’ s what i ’ d like to do now. thank you. 6 / 7 bis central bankers'speeches 1 1. t. gravelle, “ market stress relief : the role of the bank of canada ’ s balance sheet ” ( speech delivered virtually to cfa society toronto, toronto, ontario, march 23, 2021 ). 2 2. t. macklem, “ the imperative for public engagement ” ( speech delivered virtually to the federal reserve bank of kansas city jackson hole symposium, jackson hole, wyoming, august 27, 2020 ). 7 / 7 bis central bankers'speeches

away from this broad approach. flexible inflation targeting is not a perfect monetary policy regime, but it is hard to do better. any monetary policy regime is likely to face challenges in today ’ s changing world. our economies are adjusting to the ageing of the population, the emergence of new digital technologies, climate change, slower productivity growth and a less interconnected global economy. these changes are affecting the dynamics of inflation and will continue to do so. as our economy continues to adapt, the strong nominal anchor and the flexibility provided by flexible inflation targeting will both be very helpful. these attributes are difficult ( although not impossible ) to replicate with another monetary policy regime. there are, though, some elements of the design of our flexible inflation target that could helpfully be looked at as part of the current review. the first is whether 2 to 3 per cent is the appropriate nominal anchor and operating definition of ‘ price stability ’. many other countries have chosen 2 per cent as their nominal anchor. as part of the review, it is worth examining the arguments for and against a change to the nominal anchor. the second element is how to best think about the ‘ flexible ’ part of flexible inflation targeting. flexibility means that the board ’ s decisions are not determined by a rule – we have the flexibility to achieve the broad objective of price stability in a way that maximises welfare. a more rules - based, or highly parameterised approach, to monetary policy would provide less scope to respond in this way. flexibility also means that the board faces choices and trade - offs. for example, when supply shocks occur, there can be a short - term trade - off between inflation and growth. and in other circumstances, there can be a trade - off between achieving an inflation objective in the short term, via lower interest rates, and the build - up of macroeconomic and financial stability risks. our legislation provides the scope to make these often difficult choices in the national interest. there is, though, a question here about accountability. given the flexibility, the bank ’ s performance is sometimes hard to judge at any single point in time. this can complicate the task of holding us to account. given this, it is important that the bank explains when trade - offs are being made, including how and why. i hope the review will provide a further opportunity to examine how the rba has managed these trade - offs in the past and how it might manage and explain them in the future. recent monetary policy i would now like