and principles as early as 1998. they reflect the duty and “ self - interest ” elements already mentioned : since then we have communicated to enhance the effectiveness and efficiency of our monetary policy and to make the ecb, an independent central bank, accountable. on this score, the publication of the key elements of the monetary policy strategy back in october 1998 constituted in itself a major step towards monetary policy transparency. one element of the strategy is to quantify what the ecb is aiming at in terms of price stability, namely an increase in consumer prices of below, but close to, 2 % over the medium term. this provides guidance for inflation expectations. at the same time, it serves the purpose of accountability, for it sets a benchmark against which the ecb ’ s performance in maintaining price stability can be measured. the ecb ’ s monetary policy strategy also provides a clear and coherent framework for structuring analysis and our discussion in the governing council, and it has a remarkable role in structuring our external communication. from the start, it has helped to achieve the consistency between internal analysis and external communication which is the essence of transparency. it is also important for the ecb and the eurosystem to clearly communicate what monetary policy can, and cannot, achieve. for example, monetary policy cannot offset short - term changes in the inflation rate which are caused by economic shocks, such as sharp oil price increases or higher administered prices. it is thus a permanent challenge to explain any deviations in inflation from the definition of price stability. at the same time, it is essential for the public to be confident that such shocks do not call into question the determination and ability of the ecb to deliver price stability over the medium term. already the detailed public display of our monetary policy strategy as such is a very useful communication device. of course, real situations are always more complex than the simplified representation that a single model or a single system of equations can offer. that is the reason why our monetary policy concept is as comprehensive as possible, relying both on an economic analysis and a monetary analysis, and it reserves a central role for judgement, for the collegial wisdom of the governing council. explaining thoroughly and convincingly our assessment of complex situations is therefore of the essence. it is this combination of full knowledge of the monetary policy concept and strategy, of precise arithmetic definition of price stability and of detailed explanations on the assessment of the ecb every month which permits market participants to have an intimate understanding of our

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, 1 february 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. last week, we maintained our policy interest rate at 5 %. we are also continuing our policy of quantitative tightening. our message is twofold. first, monetary policy is working to relieve price pressures, and we need to stay the course. inflation is coming down as higher interest rates restrain demand in the economy. but inflation is still too high, and underlying inflationary pressures persist. we need to give these higher rates time to do their work. second, with overall demand in the economy no longer running ahead of supply, governing council's discussion of monetary policy is shifting from whether our policy rate is restrictive enough to restore price stability, to how long it needs to stay at the current level. let me give you some economic context for these considerations and talk about the implications for monetary policy. economic growth stalled in the middle of 2023. for many canadians, the combination of higher prices and higher interest rates has been difficult. but past interest rate increases have helped the economy rebalance, and this is relieving price pressures. lower energy prices and improvements in global supply chains have also helped to bring inflation down. growth is expected to remain flat in the near term. with weak demand in the economy, upward pressure on prices should continue to moderate, and inflation is expected to ease further. the share of consumer price index ( cpi ) components that are rising faster than 3 % has declined substantially and should continue to normalize. but tightness in some parts of the economy is continuing to hold inflation up. the most prominent of these is housing. inflation in shelter services remains high - close to 7 % because of rising mortgage interest costs, higher rents and other housing costs. and while food prices are not increasing as fast as they were, food inflation is still about 5 %. finally, inflation in services excluding shelter has improved, but there are signs that price pressures remain. 1 / 2 bis - central bankers'speeches all this push and pull on inflation means that further declines in inflation are likely to be gradual and uneven. that suggests the path back to our 2 %