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

development bank of canada will buy term asset - backed securities backed by loans and leases on vehicles and equipment. all of these measures are helping to meet a rising demand from business and individuals who have been finding it difficult in this environment to raise adequate funds. we have all heard reports about ongoing tightening in both the availability and the pricing of credit. nonetheless, our latest figures show continued strong growth in total household credit – 9. 6 per cent in january compared with the same period one year earlier – and limited deceleration in growth of total business credit. the latter stood at 4. 2 per cent in january compared with the same period one year earlier as accelerating growth in bank lending has helped to offset a contraction in market financing. we will continue to closely monitor credit growth and credit conditions in canada. in conclusion, as we are all very well aware, the canadian economy is feeling the effects of the global turmoil and recession. authorities have put a lot of fiscal and monetary stimulus in place – in canada and globally – to support the recovery. however, as i noted at the outset, stabilization of the global financial system remains a precondition for the global and canadian economic recoveries. investor and public confidence has been badly shaken, but will recover with the timely implementation of ambitious plans in some major countries to address toxic assets and to recapitalize financial institutions. however, if these national and multilateral measures are not timely, bold, and well - executed, canada ’ s economic recovery will be both attenuated and delayed. i would now be pleased to answer your questions.