pressure is expected to ease in the long term, there is no need to take a further step toward a normalisation of interest rates at this point in time. in addition, the stronger franc has already resulted in more restrictive monetary conditions. with our decision to keep the three - month libor rate on hold, we are adhering to our current monetary policy course : we are making use of our monetary policy leeway to support growth without jeopardising long - term price stability. every forecast and every decision is fraught with uncertainty. should unexpected events delay economic recovery or push up the swiss franc sharply, we shall take appropriate action. for such cases, the swiss national bank keeps all its options open. 2 / 3 observed inflation december 2004 inflation forecast on september 2004 with libor at 0. 75 % and of december 2004 with libor at 0. 75 % 3 / 3

years since 2001, gives our approach legitimacy — that is crucial in a democratic society. and having an explicit number for a clear target like the inflation rate makes it easy to judge our work. importantly, the agreement also gives inflation targeting additional credibility, which has made it more effective. this credibility has grown with our success in hitting the target. the combination of inflation targeting with a floating exchange rate has given canada scope to pursue a truly independent monetary policy, suited to our specific conditions. the framework has also given us flexibility to respond to economic shocks. we could act aggressively during the global financial crisis, for example, because inflation expectations were so well anchored. and, during the crisis, our framework provided an anchor that helped explain our actions. it was not just canada that benefited from improved economic performance. this outcome was shared by many countries as inflation targeting spread, contributing to a period known as the “ great moderation. ” that success had a downside — the extended period of positive economic performance spawned rising financial imbalances. in short, we learned that while inflation targeting can bring about economic stability, that is not a sufficient condition for financial stability. let me mention one more important benefit of our framework. inflation targeting has made the bank of canada much more transparent. from the beginning, we knew that inflation expectations would be important. if people believed we would bring about low and stable inflation, they would behave in a way that would help make that happen. it has become clear over 25 years that it is easier to anchor inflation expectations when people understand what the central bank is doing, and why. this has led to a steady evolution in our approach to communications — in short, more and deeper communications around monetary policy decisions. in governor bouey ’ s day, communication with the public was not a high priority. one or two public speeches a year was normal, with an occasional one by a deputy governor. so far this year, governing council members have given 17 public addresses, like this one, each broadcast live over the internet and posted on our website for future reference. there have been many other changes that make us more transparent and accountable. four years after moving to inflation targets, we began publishing our monetary policy report ( mpr ), which explains in detail how we interpret developments in the economy and spells out our economic and inflation forecasts. senior deputy governor wilkins and i hold press conferences after the publication of each issue of our mpr and financial system review, and we offer opening statements that