banking 5 and elsewhere. the bank's committee is called the governing council. it consists of the governor, the senior deputy governor, and four deputy governors. the governing council is advised by staff and by a monetary policy review committee, which looks at the evidence and the projections, and raises issues. open discussion and debate are encouraged. decisions benefit from the exchange of differing views among members – what james surowiecki calls the " wisdom of crowds. " 6 these differing views arise largely from different weightings of various aspects of the analysis presented by bank staff. the bank's clear goal – meeting the inflation target – helps to focus the deliberations. and with decisions made every six to eight weeks, there are frequent opportunities to take new soundings and adjust course. a good example of how we apply these strategies is the way we estimate potential output. potential output is important in understanding inflation dynamics over time, but, as i said earlier, it cannot be measured directly. we're not sure that our models fully capture potential output, especially when the economy is undergoing significant structural change. to add to the challenge, some of the data used in these models are frequently revised. so, in addition to the readings we get from our models, we also consider a number of alternative indicators of pressure on capacity. these indicators include the rate of capacity utilization, measures of labour shortages, building vacancy rates, reports from our quarterly regional surveys of firms, and the recent behaviour of inflation relative to expectations. of course we also consider more direct influences on inflation such as import prices, cost pressures such as wages relative to productivity, and inflation expectations. i should also mention that we meet, on a regular basis, with a wide variety of business people to discuss their investment and hiring intentions, their costs and their pricing decisions, and any constraints they may be facing. the information we obtain from these meetings helps us to interpret the numbers and better informs our judgment. of course, the strategies i have mentioned complement one another. taken together, they help the bank to arrive at a comprehensive and balanced view of developments in the canadian economy, the outlook for inflation, and the appropriate monetary policy action to keep inflation on target over the medium term. conclusion let me conclude. in my remarks today, i've described how the bank of canada deals with the uncertainty that underlies the conduct of monetary policy. the task of monetary policy is, and is sure to remain, a challenging one, given the limits of understanding

mark carney : summary of the latest monetary policy report update opening statement by mr mark carney, governor of the bank of canada, at a press conference following the release of the monetary policy report update, ottawa, 22 january 2009. * * * good morning. we are pleased to be here with you today to discuss the january monetary policy report update, which we published this morning. the outlook for the global economy has deteriorated since the october monetary policy report, with the intensifying financial crisis spilling over into real economic activity. heightened uncertainty is undermining business and household confidence worldwide and further eroding domestic demand. major advanced economies, including canada's, are now in recession, and emerging - market economies are increasingly affected. commodity prices – especially energy prices – have fallen as a result of substantially weaker global demand. stabilization of the global financial system is a precondition for economic recovery. to that end, governments and central banks are taking bold and concerted policy actions. there are signs that these extraordinary measures are starting to gain traction, although it will take some time for financial conditions to normalize. in addition, considerable monetary and fiscal policy stimulus is being provided worldwide. canadian exports are down sharply, and domestic demand is shrinking as a result of declines in real income, household wealth, and confidence. canada's economy is projected to contract through mid - 2009, with real gdp dropping by 1. 2 per cent this year on an annual average basis. as policy actions begin to take hold in canada and globally, and with support from the past depreciation of the canadian dollar, real gdp is expected to rebound, growing by 3. 8 per cent in 2010. a wider output gap through 2009 and modest decreases in housing prices should cause core cpi inflation to ease, bottoming at 1. 1 per cent in the fourth quarter. total cpi inflation is expected to dip below zero for two quarters in 2009, reflecting year - on - year drops in energy prices. with inflation expectations well - anchored, total and core inflation should return to the 2 per cent target in the first half of 2011 as the economy returns to potential. global developments pose significant upside and downside risks to the inflation projection. on the upside, the global economy could be stronger, if global fiscal stimulus turns out to be more expansionary than expected, or if aggressive policy actions taken across major economies restore confidence more quickly than projected. on the downside, the global recession could be deeper and more protracted because