mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at a press conference following the release of the monetary policy report, ottawa, 23 april 2009. * * * good morning. paul and i are pleased to be here with you today to discuss the april monetary policy report, which we published this morning. • these are difficult economic times with the canadian economy being buffeted by an intense and synchronized global recession. in recent months, that global recession has been exacerbated by delays in implementing measures to restore financial stability around the world. • g - 20 policy - makers are now responding to the global crisis with renewed commitment to concrete initiatives and comprehensive plans. our base - case projection is that these policies will be implemented in an effective and timely manner, and their impact will reach full force next year. • as a result of the current global economic and financial situation, the bank now projects that the canadian recession will be deeper, that our return to growth will be delayed by one quarter to the end of 2009, and that our recovery will be somewhat more gradual. • the broad outlines of the canadian outlook are the same, but its profile has shifted. • canada's real gdp is projected to decline by 3. 0 per cent this year, and growth is expected to resume in the autumn and accelerate to 2. 5 per cent in 2010, and 4. 7 per cent in 2011. • our outlook for inflation is broadly consistent with that in january. total inflation will temporarily fall below zero in 2009, but core and total cpi inflation are expected to return to the bank's 2 per cent inflation target in the third quarter of 2011. • in that context, on tuesday, the bank lowered the policy interest rate by 1 / 4 of a percentage point to 1 / 4 per cent, which is judged to be the effective lower bound of the policy rate. conditional on the outlook for inflation, the bank has committed to holding this rate at 1 / 4 per cent until the end of june 2010. • since december 2007, we have cut interest rates by a total of 425 basis points to their historic lows and lowest possible levels. it is the bank's judgment that this cumulative easing, together with the conditional commitment to keep rates low for a considerable period, is the appropriate policy stance to move the economy back to full production capacity and to achieve the 2 percent inflation target. • however, these are uncertain times and

let ’ s move on to france ’ s relationship with the financial markets and with the developments in its banking system. are you concerned about what the ratings agencies have been saying about france? or are ratings agencies irrelevant these days? they don ’ t seem to have had much of an impact on france ’ s borrowing costs. noyer : no. i don ’ t worry about ratings agencies. the crisis led to a weakening in public finances in most countries, so in relative terms there have been few changes in their ratings. no agency is denying that france still has one of the strongest risk profiles in europe. the second reason why i don ’ t worry is that worldwide authorities such as the g20 and the fasb have said very clearly that they want market players to rely less on credit ratings agencies and to make their own judgments. this can be done by banks ’ internal models or other types of analysis by investment managers which are more sophisticated than they used to be a few years ago. for all those reasons i don ’ t think the agencies are as influential as they used to be. the agencies themselves have always claimed that they are just one of the resources available in the market. they have always insisted quite rightly that they are not the final arbitrators of investment decisions. euroweek : what about the french banking system? are you comfortable that the french banks are adequately prepared for basel iii? noyer : i have always considered each of the five major groups within the french banking system to be basically resilient. the universal banking model is playing an important role in that respect because it creates a large base of diversified revenues which means that when one business line of the banks has been hit by a shock they can rely on the variety of their other revenues and preserve their earning capacity. but this being said, with the benefit of hindsight, it ’ s clear that like many others the french banks weren ’ t sufficiently resilient to withstand major external shocks and tail risks during the crisis. so the french banking sector had to increase its capital base and reduce its leverage. i have to say that in my view the french banks have done so quite successfully and rapidly. between the end of 2011 and june 2012 they increased their capital base by €20bn through retained profits or fresh fundraising in the market or from their shareholders. they have also managed to achieve a very well controlled process of deleveraging by reducing their exposure to non - core businesses, in general at good prices. so their