number of redundancy notices is dropping and the number of new job vacancies is increasing. relatively strong growth in domestic demand in the period ahead, in combination with the fact that it should become increasingly difficult for companies to boost output without also adding to their workforces, means that we foresee a rise in the demand for labour in the coming years. the government ’ s recently announced labour market policy programmes for next year can be expected to entail that total employment will increase considerably more than regular employment. but there should also be a rise in the number of regular jobs, among other things in construction, the public sector and the private services sector. it is, as always, difficult to assess how total capacity pressures in the economy will develop in coming years, and thereby what inflation impulses we may expect from wage formation and companies'price - setting behaviour. cost pressures have recently been low, which is partly due to the relatively high productivity growth. however, the reasons behind this are not entirely clear, which makes the assessment of future productivity growth more difficult. it does appear likely that the high level of productivity growth has to some extent been cyclical and a result of the composition of growth. it is reasonable to believe that productivity will increase at a slower rate in future as growth is expected to be linked to a greater extent to strong domestic demand and increased production in the private services sector. all in all, declining productivity growth and higher wage increases as the labour market improves ought to lead to a gradual rise in companies'production costs. however, the cost increases look to be moderate, and we expect that cost pressures will remain relatively low over the coming years. it should be emphasised that it is difficult to determine exactly how far productivity growth will slow down and thereby how much companies ’ costs may increase in future. it is likely that the rate of increase in productivity has risen as a result of the large - scale investment in information technology made by companies at the end of the 1990s and due to the effects of globalisation on competition and output. however, it is fully possible that we will have reason to revise up our forecast for productivity growth even more in coming years. it is just as conceivable that productivity growth will prove to be weaker than estimated. gradually rising inflation inflation has remained low since the end of 2003. both increases in prices of consumer goods that are mainly imported – imported inflation – and increases in prices of domestically - produced goods – domestic inflation – have remained low for

the fifth and final stage of the process – communication – focuses on the publication of the press release at 9 : 00 a. m. on tuesday announcing the bank ’ s decision and explaining the reasons behind it. four times a year, this message is reinforced and expanded upon with the release of a monetary policy report one day later. the report provides a more detailed account of canadian and global economic developments, the bank ’ s projections, and the major upside and downside risks that could affect the inflation outlook. in addition to this report, two other publications are released four times a year, approximately one week before the interest rate decision. the business outlook survey ( bos ) summarizes the results of the quarterly interviews that the bank ’ s five regional offices conduct with a representative sample of businesses across the country. this survey is an important complement to the other material that the mprc and the governing council rely on and serves as a kind of “ reality check ” of what is happening on a regional basis. the second publication is the senior loan officer survey, which is based on interviews conducted with major banks and financial institutions in canada to determine whether lending conditions for businesses have eased or tightened in the previous three months. the final elements of the bank ’ s communication effort around these four monetary policy reports involve a press conference by the governor and the senior deputy governor and parliamentary appearances at the house of commons standing committee on finance, and the senate standing committee on banking, trade and commerce. as should be clear from the process i have just described, the bank places a great deal of importance on communication. it is a critical part of our accountability to canadians and enhances the effectiveness of monetary policy by deepening the public ’ s understanding of the economy and our actions. three popular misconceptions about monetary policy despite the emphasis that we put on communication and all the time that we devote to these activities, there is frequently some confusion in the minds of the public about what monetary policy does and the constraints that the bank might operate under. i would like to take the bis central bankers ’ speeches last few minutes of my presentation, therefore, to discuss three of the most popular misconceptions. they are : 1. the bank ’ s narrow focus on inflation ignores more important objectives such as full employment and a rising standard of living. not true. experience has shown that price stability is the most important contribution that the bank can make to the economic well - being of canadians. since the introduction of inflation targeting in