tiff macklem : opening statement - standing senate committee on banking, trade and economy opening statement by mr tiff macklem, governor of the bank of canada and ms carolyn rogers, senior deputy governor of the bank of canada, before the standing senate committee on banking, trade and the economy, ottawa, ontario, 1 november 2022. * * * good evening. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report ( mpr ). last week, we raised the policy interest rate by 50 basis points to 3. 75 %. this is the sixth consecutive increase since march. quantitative tightening continues and is complementing increases in the policy rate. we also expect our policy rate will need to rise further. how much further will depend on how monetary policy is working to slow demand, how supply challenges are resolving and how inflation and inflation expectations are responding to this tightening cycle. our decision last week reflected several considerations. first, inflation in canada remains high and broad - based, reflecting large increases in both goods and services prices. inflation has come down in recent months, but we have yet to see a generalized decline in price pressures. about two - thirds of the components of the consumer price index ( cpi ) have risen by more than 5 % over the last year. and rising prices for essentials like groceries and rent are hitting lower - income canadians particularly hard. second, and related, the economy is still in excess demand - it's overheated. job vacancies have declined from their peak but remain high, and businesses continue to report widespread labour shortages. with the economy now fully reopened, households want to enjoy many of the close - contact services they have missed, but businesses can't keep up, and we have seen prices for services rise rapidly. third, higher interest rates are beginning to weigh on growth. this is increasingly evident in interest - rate - sensitive parts of the economy, like housing and spending on big - ticket items. but the effects of higher rates will take time to spread through the economy. fourth, there are no easy outs to restoring price stability. we need the economy to slow down to rebalance demand and supply and relieve price pressures. we expect growth will stall in the next few quarters - in other words, growth will be close to zero. but once we get through this slowdown, growth will pick up, our economy will grow solidly, and the

international standards are the focal point in ensuring an efficient crossborder payments flow. in my view, these three features are the key determinants of a stable and broadly accepted digital currency that fits into the international financial system. against this backdrop, safe and efficient payment markets must be brought to the next level, in particular for cross - border and cross - currency payments. this topic has been on the agenda for several years. while we have seen significant progress in improving payments at the domestic or regional level, cross - border payments are, putting it bluntly, still in the medieval age. the g20 roadmap on enhancing cross - border payments is an important step in this direction. the committee on payments and market infrastructures, together with the financial stability board and the bis, has set up a comprehensive working programme encompassing 19 building blocks across five focus areas, including new payment infrastructures and arrangements, which covers central bank digital currencies, amongst other things. this work can only serve the long - term goal of achieving a fair and sustainable payments landscape, as long as international cooperation thrives. i am optimistic that this fruitful work initiated by the g20, but also in the form of other international formats, will continue. cbdc might not be the panacea for all challenges that payments are facing. but it might be an option, including for cross - border payments. in a nutshell, payments are – and always will – be a backbone of the economy. the digital economy has already changed the payment landscape quite significantly and will continue to do so in future. it is the responsibility of the central bank to create trust in its currency and to ensure that payments remain competitive, innovative and safe. we also have to ensure that central bank money will be offered in a way that is compatible with the digital economy. let me finish with the words of abraham lincoln : “ the best way to predict the future is to create it. ” 1 bis papers no 114, ready, steady, go? – results of the third bis survey on central bank digital currencies 3 / 4 bis central bankers'speeches ( january 2021 ). 2 www. bundesbank. de / en / tasks / topics / making - payments - in - 2020 - the - year - of - covid - 19 - card - based - and - contactless - payments - trending - 823592 3 www. bis. org / publ / othp33. pdf 4 www.