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, 2 may 2024. * * * good morning. 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. in april, we maintained our policy interest rate at 5 % and published a revised outlook for the canadian economy. we had three key messages. first, monetary policy is working. total consumer price index ( cpi ) and core inflation have eased further in recent months, and we expect inflation to continue to move closer to the 2 % target this year. second, growth in the economy looks to be picking up. we expect gdp growth to be solid this year and to strengthen further in 2025. third, as we consider how much longer to hold the policy rate at the current level, we're looking for evidence that the recent further easing in underlying inflation will be sustained. before taking your questions, let me take a moment to discuss recent economic data and the outlook for growth and inflation. in canada, growth stalled in the second half of last year and the economy moved into excess supply. the labour market also cooled from very overheated levels. with employment growing more slowly than the working - age population, the unemployment rate has risen gradually over the last year to 6. 1 % in march. there are also some signs that wage pressures are beginning to ease. economic growth is forecast to strengthen in 2024. strong population growth is increasing consumer demand as well as the supply of workers, and spending by households is forecast to recover through the year. spending by governments also contributes to growth, and us strength supports canadian exports. overall, we forecast gdp growth in canada of 1. 5 % this year and about 2 % in 2025 and 2026. the strengthening economy will gradually absorb excess supply through 2025 and into 2026. cpi inflation was 2. 9 % in march, and price increases are now slowing across most major categories. however, shelter cost inflation is still very high and remains the biggest contribution to overall inflation. 1 / 2 bis - central bankers'speeches looking ahead, we expect core inflation to continue to ease gradually. the more timely three - month rates of core inflation are well below the 12 - month rates, suggesting some downward momentum. but with

control as a means to better overall economic performance. interestingly, once a central bank has adopted an explicit inflation target, as we have, and is held to account for it, the move towards greater transparency is speeded up. for it quickly becomes apparent that monetary policy will be more successful in meeting the target if both the public and financial markets understand the factors affecting inflation as well as the central bank ’ s assessment of those factors and its likely response. here in canada, we found that, as we consistently met our targets, public expectations about future inflation changed - the more credible the bank ’ s commitment to the targets became, the more canadians formed their plans on the assumption that the future trend of inflation would stay inside the target range. over time, a credible commitment to inflation control also sets other positive developments in motion. as credibility rises, uncertainty about future inflation diminishes. interest rates are lower than otherwise and investment in machinery, equipment, and technology increases, leading to stronger economic growth in the longer run. but that is not all. as canadians become more confident that inflation will be controlled, they are less quick to react to unexpected disturbances that could affect inflation. this contributes to greater economic stability and gives the bank of canada a bit more time to assess the extent and persistence of such disturbances. greater public confidence thus gives the bank more latitude to explore the limits of the economy ’ s capacity to produce and to create jobs without setting off inflation pressures that undermine the sustainability of the economic expansion. transparency and accountability in monetary policy require effective communication. at the bank, we have undertaken a series of initiatives to improve our communications with the public. five years ago, we redesigned our annual report to make it a more reader - friendly yearly account of how we have managed the bank and how effectively we have carried out our main responsibilities. at that time, we also introduced a monetary policy report, which is published every six months - in may and november. this report describes our management of monetary policy and gives the bank ’ s assessment of recent economic information as well as our outlook for the economy and inflation. after the release of each monetary policy report, we meet with media as well as with business economists and financial analysts. in addition, i appear before a parliamentary committee to discuss the report ’ s contents. both of these initiatives are important parts of the accountability process. six months, however, has been proven to be rather a long time between monetary policy reports, especially for market participants and economists who follow