have been mixed. while job growth has certainly been firm, both wages and unit labour costs have grown only slowly. the data suggest that material slack remains in the canadian labour market, in contrast with the us labour market, which is close to full employment. at the same time, canadian exports and business spending are still weaker than you would expect to see at this stage of the business cycle. companies are telling us that while they plan to raise spending, the planned increases are modest, or tied to maintenance, rather than expansion. in short, the economy is not yet firing on all cylinders. in addition, canadian companies are dealing with heightened levels of uncertainty related to us tax and trade policies. we still do not know what tax changes are coming, or when. and the range of potential trade measures under discussion is even wider now than it was in january. it includes a border - adjustment tax, increased tariffs aimed at specific industries or countries, nontariff barriers and even broader, multilateral measures. we do not know which of these will be enacted ; their timing is uncertain ; and each would affect the global and canadian economies 1 / 2 bis central bankers'speeches through a different, complex set of channels. with all of this uncertainty, we cannot reliably model the impact of changes to us trade policy. instead, we have built in an extra degree of caution in our forecast for exports and investment relative to our january projection. total inflation has been close to 2 per cent and is expected to dip to about 1. 7 per cent in the middle of the year before returning to near its target. however, our core inflation measures are all in the lower half of the target band and have been trending downward. this supports the view that the economy continues to have significant excess capacity. our current base - case forecast calls for the canadian economy to absorb its excess capacity sometime in the first half of 2018, which is a bit sooner than we projected three months ago. we are certainly happy to see the recent strength in the economic data and want to see more of it in order to be confident that growth is on a solid footing. we judge that the economy still has material room to grow. and we remain mindful that significant uncertainty continues to weigh on the outlook. given all of this, we judged that the current stance of monetary policy is still appropriate and maintained the target for the overnight rate at 1 / 2 per cent. with that, mr. chairman, senior deputy wilkins and i would be

patrick honohan : banks and the budget – lessons from europe address by mr patrick honohan, governor of the central bank of ireland, to the societe universitaire europeenne de recherches financieres ( suerf ) conference, dublin, 20 september 2010. an earlier version of this address was presented in beijing on 17 august 2010. * * * my topic today goes to the heart of the financial crisis from which we are emerging. for it is abundantly clear that a breathtaking series of banking failures have, directly or indirectly, been at the root of the budgetary problems now being faced by so many countries, and the impact of the banking crisis on national budgets is set to colour the pace, character and geographical differentiation of the economic recovery generally over the coming years. but there are several important channels of influence between banks and the budget, some more obvious than others. because of the scale and pervasiveness of banks, and the speed with which liquidity conditions can change, the impact of banks on the budget can be crucial. at the same time, budgetary decisions including tax and quasi - taxes crucially impact on the banks themselves as do indirect influences through the direction of credit ; when banks get into trouble, they are more likely than almost any other sector to be rescued by a government whose interventions are backed up by budgetary resources. all of this has been dramatically illustrated in recent years, months and indeed weeks. and although the epicentre of the global financial crisis was the us investment banking market, the links between banks and the budget have arguably been recently illustrated in no region more than europe and in few european countries more than in ireland. two - way channels of influence between banks and the budget – the irish example the channels of influence are present on the way up and the way down, and in both directions between banks and the budget. let me make this concrete by giving you some flavour of the irish situation. from 2003 to 2007 the irish banking system imported funds equivalent to over 50 per cent of gdp to fund a runaway property and construction bubble. the tax revenue generated by the boom came in many forms : capital gains on property, stamp duty on property transactions, value added tax on construction materials and income tax from the extra workers – immigrants from the rest of europe, from africa, from china, flooded in as the construction sector alone swelled up to account for about 13 per cent of the numbers at work ( about twice the current level, which