stephen s poloz : release of the monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 25 october 2017. * * * good morning. senior deputy governor wilkins and i are pleased to be here to answer your questions about today ’ s interest rate announcement and our monetary policy report ( mpr ). as you know, governing council decided to raise interest rates at each of its july and september meetings, in the context of stronger - than - expected economic growth and a very strong labour market. furthermore, over the course of the summer, we saw a firming of inflation indicators and a rapidly closing output gap. as we predicted in july, the economy is showing signs of moderating in the second half of the year. nevertheless, we expect the economy to continue to grow at an above - potential pace. today, we left our policy rate unchanged at 1 per cent. we regard this level as appropriate in light of our updated projection for the economy and inflation — in particular, we expect inflation to reach our 2 per cent target in the second half of 2018. this is a little later than we projected in july, primarily because the canadian dollar has strengthened in 2017. before taking your questions, let me offer a few comments around governing council ’ s deliberations. governing council agreed that the economy is likely to require less monetary stimulus over time, but we will be cautious in making future adjustments to our policy rate. four key issues are adding uncertainty to the projection. these are the same four issues that i highlighted in my recent speech in st. john ’ s, and they played an important role in our deliberations for today ’ s decision. discussion of these issues features strongly in today ’ s mpr. the first issue on which governing council spent considerable time is around inflation itself. in this mpr, we investigate a number of conjectures around the apparent softness of inflation in several advanced economies. i refer you to box 1 of the mpr. these conjectures include a role for technology, specifically digitalization, which may be putting downward pressure on inflation ; a role for imported disinflation from lower - cost countries ; or more generally, a role for the forces of globalization. suffice to say that for the canadian data, this work has generally confirmed our faith in our model of inflation, in which inflation depends mainly on the degree of excess

the best national supervisory boards have a mix of supervisors, magistrates and members with a long banking industry experience. although the members of the supervisory board of the ecb have a variety of skills, including in business management, law, accounting and risk, and although the six members chosen by the ecb have been carefully chosen to bring as much diversity as possible, the institutional set - up leaves the supervisory board with less first - hand banking experience than perhaps desirable. the supervisory board plays an extraordinary central role in the ssm because all supervisory decisions requiring approval under the prudential legislation for all significant institutions must be approved by it and subsequently by the governing council. the ssm is hampered by the eu treaty which limits decision making authority at the ecb to the governing council and the executive board. ireland has learned from the previous modus operandi of its financial regulator the pitfalls of overly centralised decision - making and of a two tier decision making bis central bankers ’ speeches body. as a result, supervision in the central bank has been highly devolved since the beginning of the decade, and very few decisions are deemed so important that they need to be taken by a director or the deputy governor. in a stark contrast, the ssm has operated since day one at the extreme end of centralisation. not a single decision, even the most routine and least consequential one, has been delegated. electronic mailboxes of supervisory board members and governors are clogged with a daily shower of insignificant written procedures, and unproblematic fitness and probity applications can take months to be processed. legal impediments need to be lifted to make delegation possible and bureaucracy reduced. the governance and decision making structure are yet to be truly tested as admittedly the ssm has yet to face its first open crisis. issues of substance let me move now to some issues of substance. it remains the case that many banking systems in the eurozone, including ireland ’ s, are largely nationally focused. allied to this are the deeply different business models, legal environment, ways of banking, and economic outlooks and as a result the ssm has to strike a balance between consistency and taking due account of national realities. as ignazio angeloni has reminded us, the ecb has launched a consultation on the ‘ options & national discretions ’ in an attempt to facilitate the application of the capital requirement directive and regulation across the eurozone. this is an important initiative consistent with the ss