price inflation is now well below the core rate of inflation. and in such circumstances, it is equally inappropriate to base our policy actions on swings in total cpi inflation. the slowing economy in the past year let me now look back at a rather difficult year for the economy. during 2001, we lowered interest rates at every fixed announcement date, in order to adjust to the changing economic circumstances. at the beginning of the year, our main concern was the impact that a slowing u. s. economy would have on canada. although domestic demand in canada was holding up, against a backdrop of weaker foreign demand, we lowered our target for the overnight rate through the first half of the year. both the old and new measures of core inflation also remove the effect of changes in indirect taxes. but by mid - summer, evidence began to accumulate that the u. s. slowdown would be more protracted than anticipated, and that economic activity outside north america would be much weaker. at the same time, there were indications that domestic demand in canada, which had held up well through the first part of the year, was softening. so at our 28 august fixed announcement date, we said that we had revised down our expectations for growth. then came the terrorist attacks of 11 september. their immediate impact and subsequent fallout compounded the problems of the economic slowdown. and the attacks presented a pressing challenge to the bank of canada and other central banks : to keep the world's financial systems operating smoothly. one of the bank's key functions is to promote financial stability in canada. that means keeping markets functioning well, even in times of extreme stress, such as the days immediately following 11 september. the bank of canada, as did other central banks around the world, stepped in to provide financial markets with ample access to domestic liquidity. and we reached an agreement with the u. s. federal reserve that would have permitted us to provide extra u. s. - dollar liquidity to canadian banks had it been necessary. in short, we made sure that the disruption did not turn into gridlock. if there was one positive thing to emerge from this terrible event, it was that the global financial system kept running as well as it did. but in the aftermath of these events, we were left with another challenge. that was to try to minimize the economic impact of the attacks. it was obvious that consumer and business confidence would suffer. we needed to do our part to help keep the loss of confidence as small

speech embargo 21 september 2017, 5. 30 pm second karl brunner distinguished lecture introduction of john b. taylor thomas j. jordan chairman of the governing board swiss national bank zurich, 21 september 2017 © swiss national bank page 1 / 4 ladies and gentlemen i am very pleased to welcome you to the 2017 karl brunner distinguished lecture. the swiss national bank established the karl brunner distinguished lecture series to pay tribute to academics whose research is of particular relevance for central banking. with this annual lecture, we want to reach a wide audience, including, in particular, students. for this reason today ’ s event is taking place at the eth zurich, which is internationally one of the most renowned academic institutions. i would like to thank the president of the eth zurich, professor lino guzzella, for making these fantastic premises available to us. this year, we are paying tribute to john b. taylor. he is one of the world ’ s foremost economists. john ’ s work is characterised by a keen interest in highly relevant questions, from both an academic and an applied point of view. he has made major contributions to economic theory. in addition, by bridging the divide between theory and practice, he is one of few economists to have had a profound impact on economic policy and thus on macroeconomic stability. john is also a very effective teacher. just let me give you one example. did you know that tiger woods, the famous golf professional, was his student in the introductory class at stanford? john taught tiger about opportunity costs. immediately afterwards, tiger left college and joined the pro tour. clearly, a decision that paid off. but back to john taylor again. today, he will talk about ‘ ideas and institutions in monetary policy making ’. before giving him the floor, i will briefly introduce him. born in yonkers, new york, john taylor earned his a. b. from princeton university and his ph. d. from stanford. he taught at columbia university from 1973 – 1980 and at princeton university from 1980 – 1984. and since 1984, he has been teaching and researching at stanford. john is the perfect economist. he is outstanding as a researcher, policy advisor and teacher. in acknowledgment of his exceptional services, he has received a number of prestigious awards for excellence in all these three fields. let me say a few words about each of these areas, beginning with john taylor the researcher. his research topics range from work