mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, 20 july 2011. * * * good morning. tiff and i are pleased to be here with you today to discuss the july monetary policy report, which the bank published this morning. the global economic expansion is proceeding broadly as projected in april, with modest growth in major advanced economies and robust expansions in emerging economies. growth in the u. s. economy has been slower than expected. it continues to be restrained by the consolidation of household balance sheets and slow growth in employment. while growth in core europe has been stronger than expected, necessary fiscal austerity measures in a number of countries will restrain growth over the projection horizon. in japan, the economy has begun to recover from the disasters that struck on 11 march, but the level of economic activity will remain below previous expectations. in contrast, growth in emerging - market economies, particularly china, remains very strong. as a consequence, commodity prices are expected to remain at elevated levels, following recent declines. these high prices, combined with persistent excess demand in major emerging - market economies, are contributing to broader global inflationary pressures. widespread concerns over sovereign debt have increased risk aversion and volatility in financial markets. the bank ’ s projection assumes that authorities are able to contain the ongoing european sovereign debt crisis, although there are clear risks around this outcome. in canada, the economic expansion is proceeding largely as projected, although the expected rotation of demand is somewhat slower than had been anticipated. household spending remains solid and business investment robust. net exports remain weak, reflecting modest u. s. demand and ongoing competitiveness challenges, particularly the persistent strength of the canadian dollar. despite increased global risk aversion, financial conditions in canada remain very stimulative and private credit growth is strong. following an anticipated slowdown in growth during the second quarter due to temporary supply chain disruptions and the impact of higher energy prices on consumption, the bank expects growth in canada to re - accelerate in the second half of 2011. over the projection horizon, business investment is expected to remain strong, household spending to grow more in line with disposable income, and net exports to become more supportive of growth. relative to the april projection, growth in household spending is now projected to be slightly firmer, reflecting higher household income, and net exports

fund can be used on a permanent basis. in the mid - 1990s, oil prices were around usd 20 per barrel and income was set aside. this year the oil price must be over usd 50 to generate sufficient oil revenues to make transfers to the fund. we must be prepared for wide variations in oil prices, and the first year without transfers of oil revenues – but rather withdrawals – may be near. kjell g. salvanes, jarle møen and kristiina huttunen ( 2009 ) : “ bedriftsnedlegging, omstillingsevne og regional mobilitet i norsk økonomi ” ( enterprise closures, adaptability and regional mobility in the norwegian economy ). appendix to the ministry of finance ’ s long - term perspectives for the norwegian economy 2009 [ report no. 9 ( 2008 – 2009 ) to the storting ]. the government has stated that the annual return on the fund will be close to 4 per cent over time. since its establishment, the average return has been 2¾ per cent. it is only one year ago that we witnessed the steepest fall in global capital markets in our time. by maintaining the fund ’ s risk profile it is fairly probable that the average return will gradually approach 4 per cent again. the government can choose the composition, required rate of return and risk profile for its investments without taking into account the funding needs of norwegian enterprises. norwegian enterprises can choose their debt and equity capital structure independently of the government ’ s financial investments. there is a capital market between the government as investor and corporate capital needs. the government ’ s foreign savings plans do not therefore influence norwegian companies ’ access to capital and required rate of return on their investments. the profitability of government investments is based on a discount rate of 4 per cent. this secures the same required rate of return as the government expects to achieve on its wealth fund investments over time. one question that nevertheless arises is whether there is a queue of sound and profitable projects that have to wait because of an excessively tight fiscal policy. it is difficult to find support for this. in the national transport plan for 2010 – 2019, which can perhaps be considered representative of government spending, spending on road investments is set at around nok 140 billion. 10 the profitability of about two - thirds of the investments has been evaluated. the calculations capture time saved and reduced costs related to accidents and the environment. investment costs and future operating expenses are de