to calculate. 15 however, excluding some of the most volatile components from the cpi doesn ’ t guarantee that the resulting measure will always be smooth. some components included in cpix ( for instance, electricity ) have shown fairly high volatility in recent years, while others, such as the prices of autos and certain regulated services, have tended to move countercyclically, thereby obscuring the relationship between cpix and the output gap. 16 alternative measures of core inflation provide additional valuable information in this context. for instance, the bank ’ s common component is well suited to seeing through one - off isolated price changes and tends to be more highly correlated with measures of economic slack. 17 but it isn ’ t perfect either. it can be hard to explain, given its reliance on more advanced statistical methods. against this background, the properties of various measures of core inflation will be reexamined to determine whether the bank should continue the practice of identifying one preeminent measure of inflation as its operational guide and, if so, whether cpix should continue to play that role. conclusion let me conclude. canada ’ s inflation - targeting framework merits top marks. it has performed extremely well in good times and helped us weather the bad times. for this reason, any modification to the framework must be thoughtfully researched and carefully considered. this doesn ’ t mean there is no room for improvement, just that – as i emphasized earlier – the bar for change is high. by anchoring inflation expectations, the policy has earned invaluable credibility. it would be a mistake to compromise that credibility. although the financial crisis and its aftermath are forcing all central banks to reassess their operating frameworks and mandates, conducting such reviews is a well - established routine for us at the bank of canada. we believe that one of the core strengths of our policy framework is the research program we undertake leading to the periodic renewals of the agreement with the government of canada. research on the issues i have raised in this speech will help to inform the next renewal and, more broadly, the conduct of monetary policy. cpix excludes eight of the most volatile components of the consumer price index and adjusts the remainder for the effect of changes in indirect taxes. the components are fruit, vegetables, gasoline, fuel oil, natural gas, intercity transportation, tobacco and mortgage - interest costs. t. lafleche and j. armour, “ evaluating measures of core inflation, ” bank of canada review ( summer 2006

that so many central banks are represented here today bears witness to our commitment to continue producing high - quality research, share its results and keep interactions and intellectual spillovers alive. it is extremely unfortunate that this edition of the workshop will only allow for “ virtual ” interaction, without the social networking and informal conversations that animate in - person meetings. i hope, however, that this will be one time in which, contrary to a well - known empirical finding, intellectual spillover effects will not decay with spatial distance, but rather will prove to be as rich as ever. i therefore wish all the participants in this workshop two very constructive days of open discussions and fruitful exchanges. 3 / 3 bis central bankers'speeches