affecting internal practices, and vice versa. from a strategic perspective, bank directors must examine their current and future funding situation in light of recent deleveraging, its nearterm prospects, and the state of overall liquidity in financial markets. financial institutions rely on external funding in some fashion – either through retail deposits, interbank lending, or debt offerings. therefore, they must understand that their funding can be subject to the vagaries of the market, such as sudden shortages of market liquidity or rapid swings in investor sentiment. for example, banks may benefit in the near term in attracting deposits and thereby improve their funding positions, but they also may experience more difficulty securing other sources of funds and find that situation persisting for some time. additionally, counterparty reactions to changes in the business mix or risk profile of an institution ( or even the perceived change in its risk profile ) could suddenly hamper the ability to find funding. in recognizing the inherent leverage in the business of banking, institutions must examine longer - term implications of funding and liquidity, and begin to build those into the overall strategic plan for their organizations. the market for external funding is an international one, so liquidity troubles in one market can have repercussions in others. accordingly, banks should be prepared for a range of adverse situations related to funding and market liquidity that can be precipitated by a range of sources. bank directors and senior management need to anticipate potential difficulties in funding the bank, and demand that solid contingency plans are in place – and are regularly updated – for a variety of funding and liquidity problems. such plans should include the potential for external factors to generate a funding squeeze for the institution, even if its own positions and risk profile have not materially changed. preparing for sudden changes in the pricing and availability at any price of funding sources is something that, leading up to the current turmoil, most banks did not fully consider. instead, their managements focused mostly on building market share, growing revenues, and realizing the short - term profitability of their activities – a telling example of banks not properly including risk management in their overall corporate strategy. as the senior supervisors group survey of major financial institutions pointed out, there have been numerous examples of failures of strategic risk management and these must be rectified going forward. finally, strategic risk management for funding and liquidity needs to consider potential liquidity problems on both sides of the balance sheet. we saw such examples recently when there

tiff macklem : opening statement before the house of commons standing committee on finance opening statement by mr tiff macklem, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 23 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 ). in october, we raised the policy interest rate by 50 basis points to 3. 75 %. this is the sixth consecutive increase since march. 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 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. 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. 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 benefits of low and predictable inflation will be restored. to put this in numbers, growth in gross domestic product ( gdp ) is projected to decline from about 3a¼ % this year to just under 1 % next year and then rise to 2 % in 2024. and inflation is expected to hover around 7 % in the final quarter of this year, fall to around 3 % by the end of next year and return to the 2 % target by the end of 2024. finally, we are trying to balance the risks of under - and over - tightening. if we don't do