none of the structural initiatives i ’ ve mentioned is a silver bullet by itself. but together, they could make a large difference in our long - term economic prospects. let ’ s consider the possibilities in light of existing empirical evidence. begin with the removal of interprovincial trade barriers. conservative estimates suggest that removing interprovincial trade barriers could add one - or two - tenths of a percentage point to canada ’ s potential output annually. some estimates are far larger. as for international trade, research conducted at the world bank and elsewhere suggests that the tpp could add a further one - or two - tenths to our potential output growth. the canada – eu trade agreement should also boost potential, though estimates suggest by less than the tpp. in a low - growth world, these three initiatives taken together could have a significant impact on economic growth, year after year. now, let ’ s add the impact of targeted infrastructure spending. a prudent estimate is that this could add another tenth or two of a percentage point to potential output over the medium term. when you consider how the benefits of these policies would add up over years, you ’ ll see why every decimal point counts. a reasonable estimate is that these policies could raise the level of real gdp by 3 to 5 per cent by 2025, which would mean up to $ 100 billion more in income for canadians every year. in a lower - for - longer world, these are opportunities we bis central bankers ’ speeches simply cannot afford to miss. this is especially true because other countries are not sitting still – in other words, we could actually lose ground as other countries become more competitive, so failing to take up these structural opportunities might still mean an erosion of the status quo. conclusion it ’ s time to conclude. what i ’ ve tried to do today is be clear about the forces that have brought about this period of ultra - low interest rates and help identify the implications. while monetary policy actions played a role in the decline of interest rates, the bank sets its policy rate to meet its primary mission : returning inflation sustainably to target, thus helping to get the economy back to full output. in this sense, ultra - low interest rates are a symptom of the conditions we face, conditions that we believe are improving over time. but some of the forces leading to low interest rates will persist for a long time, so we need to prepare for lower for longer. individuals need to plan for retirement with different assumptions

on global rates. with interest rates as low as they have been, the cost of capital certainly is not a problem for well - established businesses. but as economists, we know that credit provision will always be less than perfect in a financial system such as our own. and there is a risk that changes to global banking regulation, designed to make the system safer, could worsen any such imperfections. put another way, it is likely that financing gaps continue to exist – and could easily have increased in importance – for new and young businesses, for small and mediumsized enterprises, and for trade finance and infrastructure. given the importance of young company growth at this stage of the business cycle, the bank is monitoring data on company formation and credit flows carefully. still, we are seeing a number of firms in canada ’ s non - resource sector that are operating close to full capacity. under normal circumstances, you would expect investment intentions to be rising, but so far that has not really been the case. research done at the bank of canada and elsewhere, including conversations with business leaders, suggests that the main cause of weak investment is the high level of uncertainty that companies are facing, particularly about future demand prospects. bis central bankers ’ speeches and it is understandable that businesses would be uncertain. companies have lived through the daunting experience of the financial crisis and great recession. on top of that, we have had all sorts of economic and geopolitical uncertainties across the global economy. in such an atmosphere, it ’ s not surprising that business leaders would be reluctant to commit to major new investments. however, in my conversations with canadian firms i have picked up on another possible investment impediment – hurdle rates for new investments do not seem to have adjusted to the new reality. the hurdle rate is the lowest acceptable rate of return that a company chooses for an investment to proceed. generally, you calculate the hurdle rate by adding together the riskfree interest rate, a measure of inflation expectations over the life of the project and a premium to compensate for the investment ’ s risk. because the risk - free interest rate is closely related to the real neutral rate, and because the real neutral rate has been declining, it follows that hurdle rates should also be lower, all else being equal. i have had some business leaders tell me that they have been surprised to see, for example, companies in asia pursuing investments with implicit returns of around 3 to 4 per cent, well below most companies ’ hurdle rates.