target enhance macroeconomic stability? ” bank of canada staff working paper ( forthcoming ). 11 see s. s. poloz, “ understanding inflation : getting back to basics ” ( speech to cfa montreal and montreal council on foreign relations, montreal, quebec, november 7, 2017 ). 12 an example of this would be a zone quadratic loss function. see a. orphanides and v. wieland, “ inflation zone targeting, ” european economic review 44, issue 7 ( june 2000 ) : 1351 – 87. 13 see guideline b - 20 issued by the office of the superintendent of financial institutions. 14 see w. brainard, “ uncertainty and the effectiveness of policy, ” american economic review 57, no. 2 ( 1967 ) : 411 – 25. for an excellent discussion of this principle and its limitations, see v. r. reinhart, " making monetary policy in an uncertain world, " proceedings, economic policy symposium, federal reserve bank of kansas city, jackson hole, wyoming ( 2003 ) : 265 – 74. 15 this is shown in a formal economic model in mendes, murchison and wilkins, “ monetary policy under uncertainty. ” 16 a. al - nowaihi and l. stracca, “ non - standard central bank loss functions, skewed risks and certainty equivalence, ” european central bank working paper no. 129 ( march 2002 ). 17 j. yang, b. tomlin and o. gervais, “ alternative scenario to the october 2017 mpr base - case projection : higher potential growth, ” bank of canada staff analytical note no. 2017 - 18 ( october 2017 ). 18 see s. kozicki and j. vardy, “ communicating uncertainty in monetary policy, ” bank of canada staff discussion paper no. 2017 - 14 ( november 2017 ). 6 / 6 bis central bankers'speeches

exporting more challenging, with knock - on implications for wages and prices here. that would come against the backdrop of a 5 ½ per cent sterling appreciation on a tradeweighted basis in the last year ( chart 9 ), which has extended the currency ’ s appreciation to around 17 per cent since its trough two years ago. these moves are reinforcing the disinflationary impulse from abroad, which could take a while to pass through to the sterling prices in the shops. 14 5. getting back to target in the uk all of this puts a premium on generating the domestic inflation necessary to return inflation to the target. we are on track to do that. the uk economy is performing well. uk growth is solid, unemployment is coming down, and jobs have risen by 600, 000 in the past year. wage growth is showing signs of picking up, rising to 3 % for the economy as a whole at the end of last year, and to 3. 3 % in the private sector. 15 average hours worked continue to recover on a strong upward trend. and firms ’ labour costs grew an estimated 1. 3 % in the last quarter of 2014, close to core inflation. consumer confidence and retail sales growth are at their highest in over decade. similarly real income growth is on course to be the strongest for more than a decade. firms ’ investment intensions are robust. surveys point to solid growth consistent with trend. there is little evidence of a deflationary mindset setting in. that reflects an excess of saving over investment. that in turn reflects a combination of factors including the protracted process of balance sheet repair in both public and private sectors, and more secular factors like demographics ( ageing and slower population growth ), the higher steady state costs of financial intermediation relative to the pre - crisis period, and, possibly, lower productivity growth, as a consequence of lasting scars from the crisis. see carney, m ( 2013 ), “ the spirit of the season ” at the economic club of new york ; and box on page 42 of bank of england ( 2014 ), inflation report, august. protracted pass - through, generated by stickiness in the domestic price of imported goods, challenges the classical view that the exchange rate provides an efficient shock - absorber in the face of foreign shocks. these figures refer to the quarter - on - quarter annualised growth rate of the average weekly earnings series. bis central bankers ’ speeches with domestic demand growing at around 3