banks call for interest rate rises, this is an indication of their belief that the yield curve will steepen and the term spread will increase with a rise in interest rates. however, as i have explained, the facts prove that a rise in interest rates does not guarantee a steepening of the yield curve. moreover, if monetary easing is discontinued, prices will decline, the economy will deteriorate, and nominal interest rates will decline. financial for more on this point, see harada yutaka, " naze nihon no kinri wa hikui no ka, " keiki to saikuru, no. 62, japan association of business cycle studies, november 2016. institutions seem to expect that, in the case of a rise in interest rates, only the rates on investment will increase without any changes in foreign exchange rates as well as prices of stocks and bonds, or a decline in firms'willingness to borrow. i am afraid this is not realistic. rather, premature policy tightening in the past caused economic deterioration, a decline in both prices and production, and lowered interest rates in the long run. it can be said to have played a role in creating the challenges faced by the financial industry today. iv. the economic outlook and the price stability target of 2 percent i mentioned earlier that the economy currently may be weak, and the same can be said about prices. even so, if the economy continues to recover, the labor market will tighten and prices eventually will rise. there are some hurdles to overcome in achieving stable price rises, however. first is the difficult situation the economy currently faces, as you are already familiar with. looking back at japan's past trends, the economy often would enter a recession when the sluggishness of the global economy held back exports, leading to a decline in business fixed investment and consumption. while a typical example of this is the recession following the outbreak of the global financial crisis in 2008, the stagnation in japan's economy from the latter half of 2015 also can be said to have been affected significantly by the sluggishness of the global economy, especially china. second is consumption tax hikes. tax hikes could push the economy into recession, and a resultant decrease in demand could push down prices. regarding the hike scheduled to take place in october 2019, its effects are likely to be smaller than those of the previous hike in april 2014 due to the following reasons : the rate increase - - from 8 percent to 10 percent -

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, 2 may 2024. * * * good morning. 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. in april, we maintained our policy interest rate at 5 % and published a revised outlook for the canadian economy. we had three key messages. first, monetary policy is working. total consumer price index ( cpi ) and core inflation have eased further in recent months, and we expect inflation to continue to move closer to the 2 % target this year. second, growth in the economy looks to be picking up. we expect gdp growth to be solid this year and to strengthen further in 2025. third, as we consider how much longer to hold the policy rate at the current level, we're looking for evidence that the recent further easing in underlying inflation will be sustained. before taking your questions, let me take a moment to discuss recent economic data and the outlook for growth and inflation. in canada, growth stalled in the second half of last year and the economy moved into excess supply. the labour market also cooled from very overheated levels. with employment growing more slowly than the working - age population, the unemployment rate has risen gradually over the last year to 6. 1 % in march. there are also some signs that wage pressures are beginning to ease. economic growth is forecast to strengthen in 2024. strong population growth is increasing consumer demand as well as the supply of workers, and spending by households is forecast to recover through the year. spending by governments also contributes to growth, and us strength supports canadian exports. overall, we forecast gdp growth in canada of 1. 5 % this year and about 2 % in 2025 and 2026. the strengthening economy will gradually absorb excess supply through 2025 and into 2026. cpi inflation was 2. 9 % in march, and price increases are now slowing across most major categories. however, shelter cost inflation is still very high and remains the biggest contribution to overall inflation. 1 / 2 bis - central bankers'speeches looking ahead, we expect core inflation to continue to ease gradually. the more timely three - month rates of core inflation are well below the 12 - month rates, suggesting some downward momentum. but with