stephen s poloz : opening statement before the house of commons standing committee on finance opening statement by mr stephen s poloz, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 30 october 2018. * * * good afternoon, mr. chairman and committee members. senior deputy governor wilkins and i are pleased to be with you today to discuss the bank ’ s monetary policy report. at the time of our last appearance in april, our message was about the considerable economic progress that we had seen. we explained that after a lacklustre start to 2018, growth would rebound in the second quarter, coming in at around a 2 per cent pace for the rest of the year. we also said inflation would stay somewhat above our 2 per cent target this year, boosted by temporary factors whose impact would unwind over time, returning inflation to target in 2019. six months later, we have seen some very positive developments. the canadian economy has solid momentum and continues to operate near its capacity. growth is relatively broad - based across sectors and regions and it is more balanced, as the composition of demand shifts toward business investment and exports and away from consumption and housing. the economy will grow at a rate slightly above its potential over the projection horizon, supported by both foreign and domestic demand and favourable financial conditions. meanwhile, inflation is close to target after running a little higher than we expected in july and august due in large part to changes in the way statistics canada measures airfares. while there could be further volatility in inflation in coming months, our core measures remain firmly around 2 per cent. of course, the outlook remains subject to important risks and uncertainties. let me highlight two issues : trade and household indebtedness. in april we said the most significant risk to our inflation outlook was the prospect of a large shift toward protectionist trade policies around the globe. we also reminded members that our forecast included the negative effect of increased uncertainty on the export and investment plans of companies. naturally, we spent a considerable amount of time ahead of last week ’ s interest rate decision discussing the implications of the recent us – mexico – canada trade agreement ( usmca ). the usmca is good news because it will reduce a considerable source of uncertainty that has been holding back business investment. we know from our latest business survey, completed before the agreement was reached, that investment plans were already quite positive, as firms looked to take advantage of a strong us

##une time for companies to look at how they judge the rate of return on potential investments — the so - called hurdle rate. taking a longerterm approach to capital investment could unlock a myriad of viable growth opportunities. policy - makers, for their part, can help by removing barriers to business investment and impediments to growth of smaller firms. let me mention three areas of focus. first is the ongoing need to remove obstacles to interprovincial trade. this comes up regularly in the bank ’ s conversations with business leaders. over the past nine months, the provinces and the federal government have demonstrated tremendous cooperation in dealing with the pandemic. think what we could achieve if that same spirit of cooperation was applied to removing barriers to the movement of goods, services and professionals across provincial borders. a second area of focus is infrastructure. exporters will remain reluctant to invest if the infrastructure to get their products to market doesn ’ t exist. canada has made some progress here. the lng plant being built in kitimat is one notable example that will help our energy exports in the future. however, more needs to be done. i met with leaders of a number of logistics companies last month. they shared their concerns about bottlenecks, particularly at ports. fast - growing exports need reliable transportation infrastructure, including efficient, highcapacity ports. and i know that both the port of vancouver and port of prince 6 see kpmg, british columbia cleantech : 2019 status report ( february 2020 ). - 10 rupert are working on major capacity expansions. this is encouraging. boosting our export capacity also requires building the information and data infrastructure needed to compete in a digital world. a third area of focus is people. our biggest asset is a well - educated and diverse workforce. for the past four years, the policies and attitudes of the us administration helped make canada look more attractive to students and workers, giving us an advantage. with the incoming us administration, canadian schools and companies may have to fight harder to attract and retain talent. but being a welcoming country remains an important advantage, and immigration creates economic capacity. we need to focus on ensuring that canada maintains a well - educated, multinational workforce to attract foreign investment, leading to increased exports. conclusion it ’ s time for me to conclude. the economic recovery from the pandemic is at a very difficult stage. near term, rising covid - 19 infections will dampen growth and could even deepen our economic hole.