rate of about 3 per cent. this implies that the level of output in the economy is still significantly below its production potential. however, both final domestic demand and exports grew strongly in the first quarter. these indicators, along with more recent data, suggest that growth in the first half of 2004 is likely to be somewhat above 3 per cent. in our april monetary policy report, we said that we expected the economy to grow by about 2 3 / 4 per cent in 2004 and by about 3 3 / 4 per cent in 2005. we also said that core inflation - a measure of trend inflation obtained by removing eight volatile components from the consumer price index, as well as the impact of changes in indirect taxes on the remaining components - was expected to average 1 1 / 2 per cent over the remainder of 2004 and to move back up to 2 per cent by the end of 2005. information received since the release of our april report has been generally consistent with expectations about core inflation. but the sharp rise in world oil prices, in response to stronger - than - anticipated global demand for oil and heightened geopolitical uncertainties in the middle east, means that total cpi inflation over the next several months will be higher than the bank expected in april. it is important to note that while higher oil prices may push up the total cpi over the next few months, they should not feed through into higher trend inflation, as long as inflation expectations remain anchored around the 2 per cent target. conclusion to conclude, the world economy has undergone tremendous change in recent years. and we can be sure that there is more to come. while we canadians can remain confident of our ability to adjust to change, we must not be complacent. we should continue to work at strengthening our macroeconomic framework, enhancing our productivity, and opening up further to trade. that is the best way to ready ourselves for the challenges and opportunities that lie ahead.

yves mersch : bridge forum dialogue introduction by mr yves mersch, governor of the central bank of luxembourg, to the speech by vaclav klaus, president of the czech republic, at the bridge forum dialogue conference, luxembourg, 8 march 2006. * * * mr. president, your excellencies, ladies and gentlemen, dear friends, in the bridge forum dialogue, we are most honoured to have with us, this evening, as guest speaker the head of state of the czech republic. we, in luxembourg, have a special place in our hearts for the czech republic dating back to the period when the house of luxembourg and bohemia were united between 1310 and 1437. vaclav klaus is such an eminent figure that it is almost unnecessary to introduce him. so, just a minimum of facts to refresh our memories. his academic field is economics which he studied in prague, and later, taking advantage of a period of relative liberalization, under communist rule, in italy and the united states. later, he taught economics at the charles university and the prague university of economics. in his political career mr. klaus has been, successively, finance minister of the former czechoslovakia and then prime minister, chairman of the parliament and, since february 2003, president of the czech republic. he played a leading role in the " velvet separation " of the czech and slovak republics. president klaus has written more than 20 books on political, economic and social themes and has received many prizes and honorary doctorates all over the world. mr. klaus has chosen as the title of his speech " some doubts about the eu ’ s ever - closer future ". he is known to be an excellent, even charismatic, speaker and he is fearless in expounding his own personal vision of europe. i have studied a number of recent speeches in which mr. klaus has set out his vision of europe. the points i shall make are not aimed at contradicting our distinguished speaker but merely at stimulating the debate. as a small country, luxembourg is staunchly expressing its confidence in further european integration and is deeply attached to the welfare state. as such but also as a seat of the european institutions, we are following the debate about " our europe " with great interest and the polls show that people in this spot of europe are better informed about and more aware of european matters than elsewhere. president klaus has strong views on europe and begs to differ from mainstream thinking, but on the european constitution he believes that " a new constitutional