the expectation of a long period of accommodative monetary policy and low rates, during a period with sustained high rates of resource utilization, is conducive to risk - taking, providing incentives to reach for yield and take on additional debt. to the extent that the combination of a low neutral rate, a flat phillips curve, and low underlying inflation may lead financial imbalances to become more tightly linked to the business cycle, it is important to use tools other than monetary policy to temper the financial cycle. in today ’ s new normal, a combination of strengthened structural safeguards along with countercyclical macroprudential tools is important to enable monetary policy to stay focused on achieving maximum employment and target - 11 inflation. 15 the countercyclical capital buffer, which was not available before the crisis, is particularly well designed to address financial imbalances over the cycle. conclusion with the policy rate more likely to be constrained by the lower bound, the core challenge facing the current generation of central bankers is different than the last generation. the authors of the report emphasize the importance of deploying an expanded toolkit proactively, avoiding costly delays, and communicating clearly to the public. to be fully effective, proactive use of an expanded toolkit needs to be coupled with a new strategy that achieves average inflation outcomes of 2 percent along with maximum employment over time. see, for example, the minutes of the january 2020 federal open market committee meeting ( p. 9 ), available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / files / fomcminutes20200129. pdf.

decisions on the bank rate. the press release that we issue on each of these dates gives our latest assessment of the economy and the rationale for changing or not changing the bank rate. communication, however, goes both ways. the bank also needs to understand what is happening in the markets and in all key sectors of the economy and across the regions. we need your input, your information, and your views. we can only formulate good policy if we are good listeners. so i encourage you to talk to us. the phone lines and doors at our regional offices, here in toronto and across the country, are open. recent economic developments constructive two - way communication is particularly critical in times of increased uncertainty about the future. so let me now say a few words about how the bank views the current economic situation. the canadian economy began 2001 from a strong base — expanding by an estimated 5 per cent, on average, in 2000 and with solid growth continuing right through the second half of last year despite the slowdown of the u. s. economy. in our last update to the monetary policy report, which was prepared on 23 january and released on 6 february, we revised down our projection for economic growth in canada this year to about 3 per cent, primarily because of the more abrupt weakening of u. s. economic activity. that projection assumed that the u. s. economy would expand by 2 to 2. 5 per cent, on average, in 2001, with a weak first half followed by a relatively strong rebound in the second half. when we released the update on 6 february, we pointed out that, on the basis of accumulating evidence, it appeared that u. s. economic activity in the first half of the year would be weaker than we had projected on 23 january, even though we still expected a reasonable rebound in the second half of the year. we noted that this posed some near - term risks for the canadian economic outlook. but, as we also pointed out then, despite the near - term uncertainties, the bank remains generally positive about canada's economic prospects for the year, given productivity increases and rising disposable incomes aided by tax cuts that are working to sustain domestic demand growth. of course, there are some sectors and regions of the country that will feel the effects of the u. s. slowdown more than others, for example, those with heavier concentration in the production of cars and equipment, notably equipment related to communications and information technology. offset