, as a critical element of their monetary policy frameworks, a flexible exchange rate. this gives monetary authorities the ability to set monetary policy tailored to our own domestic economic circumstances. a floating canadian dollar, or floating mexican peso, facilitates the necessary economic adjustments and sends important price signals to economic participants. conclusion let me conclude. for many firms and many employees, we know that adjustment can be painful and difficult. but in today ’ s world, not adjusting is not an option. fortunately, in both our countries, we are making these adjustments under relatively favourable conditions. global demand is strengthening, and credit conditions are good. we have a better knowledge of what we need to do. and we have made important progress in strengthening our macroeconomic frameworks. the challenges that we will face make it even more important that we continue to strengthen our policy frameworks in order to adjust to changing circumstances and to take advantage of potential gains. the faster we are able to adjust, the greater the wealth we can create for our citizens. that is not to say that adjusting will be easy. indeed, the experience of recent decades proves that it can be difficult, at least over the short term. but if we take the leap, and seize the opportunities that change will bring, our societies will surely benefit.

were worried about the cost of housing becoming detached from incomes - particularly for first - time homebuyers. and they were worried about investors contributing to rapid increases in house prices, particularly in large urban markets. then the pandemic hit and our housing market shifted up another gear, and not just in places like toronto and vancouver. we were all spending more time at home, and people in cities wanted more space, which put pressure on housing demand in smaller cities and towns. 3 low interest rates that supported the economy through the pandemic also helped fuel high house prices by reducing carrying costs. over the course of less than two years house prices went up by more than 50 % in most markets. and housing activity - the number of houses being bought and sold - was about 30 % higher than prepandemic levels. 3 / 6 bis - central bankers'speeches this spring, as we emerged from pandemic restrictions and monetary policy began to tighten rapidly in response to high inflation, the housing market started to react. this was to be expected. the level of price increases and sales activity were both unsustainably high. and because most people borrow to buy a house, housing is one area of the economy that is the fastest to react to tighter monetary policy. this tightening cycle, though, has been particularly steep. we have moved interest rates up quickly because history tells us that front - loading rate increases gives us the best chance to cool the economy quickly and keep inflation expectations anchored. this avoids the prospect of larger increases down the road. higher interest rates are starting to work to slow the economy and tame inflation. we have a long way to go to get inflation back to target, but there are some early signs that monetary policy is working. unfortunately, this adjustment is not without some pain. we recognize that. what this means for canadians one group of canadians who will be finding this adjustment painful are those who recently purchased a home, potentially stretching their budget to do so, and who chose a variable - rate mortgage. this is not a large share of households, but it is larger than it would have been based on historical trends. this is because more canadians opted for a variable - rate mortgage over the last year than have in the past, at a time when housing prices were high. 4 borrowers with a variable - rate mortgage will already have seen a significant increase in their monthly payments if their payments are also variable. borrowers with a variablerate mortgage and fixed payments may face