sometimes for nefarious purposes. against this backdrop came the pandemic and its devastating global economic impact. central banks have taken unprecedented monetary policy actions to save livelihoods, support economic recovery and avoid deflation. for the bank of canada, this has meant our first foray into quantitative easing. central banks are conducting unconventional monetary policies alongside extraordinary fiscal stimulus, which is challenging public perceptions of our operational independence. so, it is more important — yet harder — for central banks to be trusted sources of information and analysis. the imperative is to step boldly beyond market transparency and engage with the public to explain how our actions serve our economy - wide objectives. this means listening to more people, understanding their perceptions — accurate or not — factoring broader public views into our policy decisions and communicating with people on their terms, not ours. 1 / 3 bis central bankers'speeches let ’ s remind ourselves why this matters. first and fundamentally, we are all public servants. the public has a right to understand what we are doing, and we need to be accountable for our actions. second, we know that monetary policy works better when people understand it. third, many central banks are at the lower bound for their policy interest rate. in this situation, it is more essential than ever that household inflation expectations remain anchored on our target, so we can lower real interest rates. we can influence those expectations with our communications. that is why many central banks, including the bank of canada, are providing unusual forward guidance on our policy rate paths. and there ’ s a final, existential reason : without public understanding and support for independent central banks, we risk losing the public trust that is so core to our mission. issues in public communications back in greenspan ’ s time, central banks didn ’ t put much effort into tailoring messages to the public. instead, we relied on the media to speak to market participants and economists and then interpret our messages for the public. andy haldane has described this as the practice of central bankers speaking only to men : markets, economists, news agencies. 2 this practice hasn ’ t been entirely effective. a recent nber working paper shows that news articles about monetary policy are only about half as persuasive in terms of molding inflation expectations compared with communications that come straight from the central bank. 3 the best way to get our messages to the public is to deliver them ourselves. central banks have been moving toward more direct public engagement. we can all learn from

mark carney : summary canada ’ s latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, 22 october 2009. * * * good morning. paul and i are pleased to be here with you today to discuss the october monetary policy report, which we published this morning. • recent indicators point to the start of a global recovery. economic and financial developments have been somewhat more favourable than we expected in july, although significant fragilities remain. • in canada, as expected, a recovery in economic activity is also under way, following three consecutive quarters of sharp contraction. • this resumption of growth is supported by monetary and fiscal stimulus, increased household wealth, improving financial conditions, higher commodity prices, and stronger business and consumer confidence. • however, heightened volatility and persistent strength in the canadian dollar are working to slow growth and subdue inflation pressures. the current strength in the dollar is expected, over time, to more than fully offset the favourable developments since july. • given all these factors, the bank now projects that, relative to our july report, the composition of aggregate demand will shift further towards final domestic demand and away from net exports. we now expect growth to average slightly lower over the balance of the projection period. • the bank projects that the canadian economy will contract by 2. 4 per cent this year and then grow by 3. 0 per cent in 2010 and 3. 3 per cent in 2011. this projected recovery will be somewhat more modest than the average of previous cycles. • total cpi inflation declined to a trough of - 0. 9 per cent in the third quarter, reflecting large year - on - year drops in energy prices. total cpi inflation should rise to 1. 0 per cent this quarter, while the core rate of inflation is projected to reach its trough of 1. 4 per cent during the same period. • owing to the substantial excess supply that has emerged in the economy, the bank expects both core and total inflation to return to the 2 per cent target in the third quarter of 2011, one quarter later than we projected in july. • the main upside risks to inflation relate to the possibility of a stronger - thananticipated recovery in the global economy and more robust canadian domestic demand. • on the downside, a stronger - than - assumed canadian dollar, driven by global portfolio movements out of u. s. - dollar assets,