david dodge : summary of the latest monetary policy report opening statement by mr david dodge, governor of the bank of canada, to the standing senate committee on banking, trade and commerce, ontario, 26 october 2005. * * * good afternoon, mr chairman and members of the committee. we appreciate the opportunity to meet with this committee twice a year, following the release of our monetary policy reports. these meetings help us keep senators and all canadians informed about the bank's views on the economy, and about the objective of monetary policy and the actions we take to achieve it. when paul and i appeared before this committee last april, we said that the economy appeared to be operating slightly below its production capacity, and that we expected it to move back to full capacity in the second half of 2006. in our october monetary policy report, which we published last thursday, we said that economic growth in the first half of the year was somewhat stronger than we had previously expected. indeed, the global and canadian economies have continued to grow at a solid pace, and our economy now appears to be operating at full production capacity. past and recent movements in energy prices and in the exchange rate for the canadian dollar, along with competitive pressures from china and other newly industrialized economies, are giving rise to significant ongoing adjustments in the canadian economy. given these adjustments and the slow growth of productivity in recent years, the bank has slightly reduced its estimate of potential output growth for 2005 and 2006. the bank projects that the economy will grow in line with production potential through 2007, with growth averaging 2. 8 per cent this year, 2. 9 per cent in 2006, and 3. 0 per cent in 2007. with the economy operating at capacity and with higher energy prices, pressures on consumer prices are somewhat stronger than they were at the time of the july monetary policy report update. assuming energy prices evolve in line with currently prevailing futures prices, cpi inflation is projected to average near 3 per cent through the middle of 2006, before returning to the 2 per cent target in the second half of next year. core inflation should remain below 2 per cent in coming months, returning to 2 per cent by mid - 2006. the bank raised its key policy interest rate to 3 per cent on 18 october. in line with our outlook, some further reduction of monetary stimulus will be required to maintain a balance between aggregate supply and demand over the next four to six quarters, and to keep inflation on target. short - term risks to this projection appear to be

benoit cœure : interview in gazeta wyborcza interview with mr benoit cœure, member of the executive board of the european central bank, in gazeta wyborcza, conducted by mr leszek baj on 16 may 2014. * * * gazeta wyborcza : is there a recovery in europe? on the one hand, the growth of the german economy exceeds 2 %. on the other, in several countries gdp is contracting, and some of the larger economies, such as the french, spanish or italian economies, are still lagging behind. benoit cœure : we are definitely looking at a recovery. this is good news. but the latest gdp figures have confirmed that this recovery is moderate and uneven. at the same time, inflation is low. is there a risk of deflation in the euro area? we consider the risk of deflation to be very low. but the rate of inflation – 0. 7 % in the euro area in april – is rather far from our inflation objective consistent with price stability, which is about 2 %. for us at the ecb, there are two key questions at the moment. first, what are the risks to economic growth and is there a risk that this growth won ’ t be sustainable? second, it will be important to know whether this period of low inflation won ’ t be excessively prolonged. these are the elements that we will consider when setting our monetary policy. can the ecb take action then? is it going to support the european economy and try to push inflation up a little? if the uneven pace of economic recovery in the euro area is confirmed and if we see a risk of inflation being too low for too long, we can take action in june. we can act in various ways, depending on the situation. at present, however, it is too early to say what exactly we ’ re going to do. a lot depends on the forthcoming economic data and on our staff growth and inflation projections, which are to be released in june. your room for manoeuvre is limited as interest rates are already very low : the key rate is only 0. 25 %. they are low but they can still go lower. are negative interest rates in the euro area possible? negative rates are one of the instruments available to us. they have been discussed extensively by the governing council. we are technically and legally prepared for such a possibility. and market participants are well aware that