that “ some modest withdrawal of monetary policy stimulus will likely be required, consistent with achieving the 2 per cent inflation target. the timing and degree of any such withdrawal will be weighed carefully against global and domestic developments, including the evolution of imbalances in the household sector. ” our current guidance indicates that some policy action may be necessary, encouraging a degree of prudence in household borrowing. the share of new fixed rate mortgages has almost doubled to 90 per cent this year, reflecting the combination of attractively priced fixed - rate mortgages and the tightening bias of the bank of canada. guidance as an unconventional policy tool while the bank believes it appropriate to be sparing in forward policy guidance under ordinary circumstances, the calculus changes under extraordinary ones. when conventional monetary policy has been exhausted at the zero lower bound ( zlb ) on nominal interest rates, the additional stimulus that is likely to be called for is impossible to achieve using the conventional interest rate tool. extraordinary forward guidance is one unconventional policy tool, along with quantitative easing and credit easing. 14 the bank of canada used extraordinary forward guidance in april 2009, when the policy interest rate was at its lowest possible level and additional stimulus was needed. at the time, we committed to holding the policy rate at that level through the second quarter of 2010, conditional on the outlook for inflation. in effect, we substituted duration and greater certainty regarding the interest rate outlook for the negative interest rate setting that would have been warranted but could not be achieved. the bank ’ s conditional commitment succeeded in changing market expectations of the future path of interest rates, providing the desired stimulus and thereby underpinning a rebound in growth and inflation in canada ( chart 3 ). 15 when the inflation outlook – the explicit condition – changed, the path of interest rates changed accordingly. bank of canada, renewal of the inflation - control target, november 2011. bank of canada, “ framework for conducting monetary policy at low interest rates, ” mpr, april 2009. see z. he, “ evaluating the effect of the bank of canada ’ s conditional commitment policy, ” discussion paper no. 2010 – 11, bank of canada, 2010 ; and m. woodford “ methods of policy accommodation at the interest - rate lower bound, ” paper presented at the jackson hole symposium, “ the changing policy landscape, ” 31 august – 1 september 2012. bis central bankers ’ speeches our conditional commitment worked because it was exceptional, explicit and anchored in a highly credible inflation - targeting framework. it also worked

fallen to just 71 % of that of the united states. over this same period of time, canada also fell behind our g7 peers, with only italy seeing a larger decline in productivity relative to the united states. improving productivity in canada needs to be a priority for everyone, and there are two basic strategies for doing it. one is to have the economy focus more on the industries that add greater value than less - productive activities. the other strategy is to keep doing the jobs we're doing but do them more efficiently. ideally, canada would use both strategies, leading to an economy with strong productivity growth and a large concentration of high - value industries. unfortunately, canada's recent record isn't very good on either front. that may seem strange. after all, canada is known for some high - value industries, such as energy and aerospace. but while the level of productivity here is high, the growth rates aren't necessarily strong. at the same time, some industries in canada have shown pretty good productivity growth over the past couple of decades. 1 but these include sectors such as retail and wholesale trade, which tend not to generate the same amount of output per worker as sectors like energy or aerospace. i want to be clear here. improving productivity doesn't mean shutting down whole sections of the economy and telling workers they have to go learn new sets of skills. it means paying attention to where the future high - value industries are coming from. we need to ensure that the right incentives are in place to allow companies in these industries to grow and thrive. and they need the right supports, such as access to markets and financing. i expect this resonates with you here in the room. history shows that advances in productivity often come from the start - ups, the new companies led by entrepreneurs with groundbreaking ideas. organizations such as the halifax partnership and other 3 / 6 bis - central bankers'speeches incubators are encouraging the companies that can lead us to the next great breakthrough in productivity. and you can see examples across the region, particularly in the clean tech, ocean tech and agritech sectors. how to improve i want to turn now to what we can do to improve canada's productivity. many studies have looked at this issue over the years, and there's still no consensus about the causes of canada's poor performance and where policy - makers should put their energies first. but we can't afford to wait for complete certainty. there is much we can