, oil prices were still falling, and to levels below the assumptions built into our forecast. accordingly, we took out some insurance in the form of a 25 - basis - point cut in interest rates. the reaction to this cut across the yield curve and in the exchange rate would help to cushion the blow to the economy from the oil - price decline, bringing us back sooner to full capacity and sustainable 2 per cent inflation. it would also help mitigate the rise in the debt - to - income ratio by reducing the drop in income, although debt levels could rise at the margin. bis central bankers ’ speeches we knew that financial markets would be surprised by the move in january, and we generally prefer to avoid surprises. but we will do what is necessary to fulfill our inflationtargeting mandate. over the following weeks, we saw inflation decline as expected, and output expand in line with our projection. we saw financial conditions ease, and oil prices stabilize in a range reasonably close to our january projection. this made us feel increasingly comfortable with the amount of insurance we had already taken out, which led to the decision to keep rates unchanged earlier this month. the negative effects of lower oil prices are beginning to appear ; the positives will take longer to emerge. so we need to watch these competing forces play out in the economy, and the january rate cut has bought us some time to monitor the situation as it evolves. some have characterized this as a move to “ data dependency. ” i have to say i find this a bit strange. data are always crucial in determining how the economy is progressing. even in extraordinary times, central banks depend on data to help them evaluate how the economy is performing relative to expectations. as our economy gradually gets back to normal, we will continue to speak with business leaders to get their perspectives. we will continue to watch the data closely, as we always do, and see how the numbers evolve relative to our forecasts. and we will look to market participants to keep watch on the same data, and form their own opinions about what they mean. our communications focus on explaining how we expect the economy to unfold and being transparent about the risks that the central bank is weighing. all else equal, this should help reduce the chances of surprising markets. still, in normal circumstances, it ’ s natural that there would be volatility as economic surprises occur. but, we think it best to have this volatility reflected in prices in informed, well - functioning financial

per cent in 2001 to 14 per cent in 2007. during this period, world imports were growing at an annual average of 14. 4 per cent, compared with 9. 3 per cent for the united states. - 12 and the share of exports destined for the “ rest of world ” ( i. e., not the european union, japan, mexico, china or the united states ) rose from 4 per cent in 2001 to 10 per cent in 2009. phase 3 : 2008 – 16 — the great recession and its aftermath the strong global expansion of the 2000s came to a screeching halt with the global financial crisis of 2008 – 09 and the resulting great recession. global trade and canadian exports plummeted. given the magnitude of the economic downturn, this decline in global trade and canadian exports was not unexpected. what is now proving more difficult to explain is the weak recovery in exports, especially non - commodity exports, since 2012 ( chart 12 ). chart 12 : 2008 – 16 — canada ’ s exports plummeted and have been slow to recover in the wake of the financial crisis real shares of gdp and real exports, year - over - year percentage change, quarterly data, 1986q1 – 2016q2 % % - 5 - 10 - 15 - 20 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 real export growth ( left scale ) sources : statistics canada and bank of canada calculations total volume of exports relative to gdp ( right scale ) last observation : 2016q2 at the global level, trade has been held back by the slow recovery in demand, particularly in the united states and other advanced economies. 12 and the ratio of trade to output at the global level has stopped increasing at the rate it had been before the crisis. at that time, global trade was rising twice as fast as global gdp and, more recently, the ratio has been essentially flat ( chart 13 ). a number of explanations have been advanced to explain this shift, which are also relevant for explaining canada ’ s recent export performance. there are a number of explanations for this slow global recovery, including the well - known arguments by reinhart and rogoff that post - financial - crisis recoveries are generally much weaker because the financial system is impaired and deleveraging must occur. in addition, a series of significant adverse shocks, including the euro area crisis, have contributed to the slow recovery. see c. reinhart and k. rogoff, this time is different