kicks off a new initiative — another step in our ongoing efforts to help canadians better understand our actions and decisions as canada ’ s central bank. now, let me begin. global and canadian economic developments the canadian economy is progressing well. following a decade of many setbacks, 2017 was a year of robust economic growth — 3 per cent for the year as a whole. after many years in which the growth was uneven, it has become more balanced. 1 / 9 bis central bankers'speeches the material slack that existed in the economy, and especially in the labour market, has been largely absorbed. inflation is running close to our target rate of 2 per cent. while the future is subject to some notable uncertainties, which i ’ ll discuss, trends over the past few quarters have been quite encouraging. the trends have been broad - based across regions and sectors, but these favourable economic conditions are particularly evident in some parts of canada, including british columbia. global developments of course, canada is a very open economy, and its growth is supported by what is now a synchronous global expansion. this too is encouraging. we are now seeing solid growth not only in the united states and china but also in europe, as well as in many other emerging - market economies. the us economy has been on a path of mostly solid growth and job creation for a few years. at the beginning of 2018, the data indicated stronger momentum for the united states, and the tax cuts announced just before christmas were expected to boost demand further. developments since then have largely supported this story. us economic growth remained robust, at an annual pace of 2. 5 per cent during the fourth quarter of 2017, and the us economy is essentially at full employment, with the jobless rate at a 17 - year low. wage growth has also edged up in recent months. meanwhile, us business confidence remains high. and increases in government spending legislated in february are likely to provide a further boost in the next couple of years. the us economic picture still has upside potential. the current expansion could create a virtuous circle, triggering “ animal spirits ” among businesses and consumers and driving even faster growth than expected. if that happened, stronger business investment and household spending in the united states would likely benefit our economy. so, as always, we are watching developments in the united states closely. on that note, we saw some sharp movements in us and global stock markets a few weeks ago, ushering in increased market volatility

, employers tend to be reluctant to increase wages, particularly base salaries, given the uncertainty regarding the outlook for profits. they also may be reluctant to allocate profits obtained through overseas operations to an increase in wages in japan. as has been evident so far, regular employees ’ wages do not rise smoothly because each firm negotiates wages with its own union amid the low mobility of regular employees. although it has been pointed out that an increase in labor productivity is necessary for wages to rise, it is difficult to expect proper operation of the mechanism in which productivity in the economy as a whole increases. this is because, with low labor mobility, wages do not work as the intermediary function to smoothly correct the differences in productivity among firms. in order to increase productivity and the economic growth rate in japan, a change in the employment framework is necessary so that labor is transferred smoothly – through an increase in wages – from firms with low productivity and profits to those with high productivity and profits. this will take time, but if the economy continues to grow at a pace exceeding its potential, firms may face more acute labor shortages and an immediate issue of securing suitably qualified employees. in addition, the decline in energy prices will underpin corporate profits, including those of small firms. reflecting such a situation, the wage level can be expected to rise gradually among many firms. the bank, for its part, will maintain the accommodative financial conditions through the conduct of monetary policy so that the virtuous cycle from corporate profits to wages, and in turn to consumption, operates properly. given that the effects of tighter labor market conditions are not spreading to wages smoothly, some may voice various opinions about the government ’ s recent action to encourage wage increases, but i understand that such action is necessary. bis central bankers ’ speeches