stephen s poloz : release of the monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 22 october 2014. * * * good morning. carolyn and i are pleased to be here with you today to discuss the october monetary policy report ( mpr ), which the bank published this morning. as i ’ ve said in the past, the policy decision is not a mechanical one, so i ’ d like to provide some colour around the issues we are dealing with. i would also like to highlight some advances in our thinking since the last mpr. our outlook for the global economy continues to show stronger momentum in 2015 and 2016, but the profile has been downgraded since july. the good news for canada is that the u. s. economy is gaining traction, particularly in sectors that are beneficial to canada ’ s exports. and our exports do appear to be responding, with some additional help from a lower canadian dollar. our conversations with exporters indicate that they are seeing a better export outlook from the ground. however, it is clear that our export sector is less robust than in previous cycles. last spring, as you may recall, we identified which non - energy subsectors could be expected to lead the recovery in exports, and which would not. we have since investigated in more detail the subsectors that have been underperforming. after sifting through more than 2, 000 product categories, we have found that the value of exports from about a quarter of them has fallen by more than 75 per cent since the year 2000. had the exports of these products instead risen in line with foreign demand, they would have contributed about $ 30 billion in additional exports last year. by correlating these findings with media reports, we could see that many were affected by factory closures or other restructurings. in other words, capacity in these subsectors has simply disappeared. this analysis helps us understand a significant portion of the gap in export performance. our research also tells us that most of the sectors expected to lead the non - energy export recovery still have some excess capacity. our business outlook survey ( bos ) interviews indicate that while companies plan to invest in new machinery and equipment, few are planning to expand their capacity, at least so far. this helps explain why business investment might be delayed relative to what would be expected in a normal cycle. this

our judgment at this time that the risks around achieving our inflation objective over a reasonable time frame are roughly balanced. accordingly, we believe that the current level of monetary stimulus remains appropriate. some of you may be wondering why we aren ’ t being more specific about the likely future stance of monetary policy. let me answer by saying that forward guidance remains a key element of the policy tool kit – but one that we will reserve for times when we believe there are net benefits to its use. there will no doubt come a day when we will offer forward guidance again – but not this day. and with that, carolyn and i would be pleased to answer your questions. bis central bankers ’ speeches