mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, 22 april 2010. * * * good morning. i am pleased to be here with you today to discuss the april monetary policy report, which the bank published this morning. global economic growth has been somewhat stronger than projected, with momentum in emerging - market economies increasing noticeably and moderate recovery underway in most advanced economies. global growth is now projected to average slightly above 4 per cent a year through 2012. in canada, the economic recovery is proceeding somewhat more rapidly than expected in january. it is supported by continued fiscal and monetary stimulus, improved financial conditions, the rebound in global economic growth, more favourable terms of trade, and increased business and household confidence. this year should mark the turning point when the private sector takes over from the public sector as the primary source of growth. gdp is now projected to grow by 3. 7 per cent in 2010 before slowing gradually to 3. 1 per cent in 2011 and 1. 9 per cent in 2012. this profile reflects stronger near - term global growth, very strong housing activity in canada, and the bank ’ s assessment that policy stimulus resulted in more expenditures being brought forward in late 2009 and early 2010 than expected. at the same time, the persistent strength of the canadian dollar, canada ’ s poor relative productivity performance, and the low absolute level of u. s. demand will continue to act as significant drags on economic activity in canada. the bank estimates that gdp in the first quarter of 2010 was about 1 per cent below its peak in the third quarter of 2008 and some 2 per cent below its potential. the economy is expected to return to full capacity in the second quarter of 2011, one quarter earlier than projected in january. the outlook for inflation reflects the combined influences of stronger domestic demand, slowing wage growth, and overall excess supply. core inflation, which has been somewhat firmer than projected in january, is expected to ease slightly in the second quarter of 2010 as the effect of temporary factors dissipates, and to remain near 2 per cent throughout the rest of the projection period. total cpi inflation is expected to be slightly higher than 2 per cent over the coming year, before returning to the target in the second half of 2011. despite the firming of the global and canadian recoveries, there are considerable risks around the bank ’ s outlook.

. ii. conduct of monetary policy next, let me explain the bank ’ s conduct of monetary policy. first, the bank has been pursuing powerful monetary easing through comprehensive monetary easing. under the comprehensive monetary easing framework, the bank encourages a decline in longer - term market interest rates and a reduction in various risk premiums through the asset purchase program. at the monetary policy meeting held last week, the bank, with a view to responding to the downside risks to the economy that i bis central bankers ’ speeches described earlier, decided to increase the total size of the program by about 10 trillion yen, to about 50 trillion yen. second, the bank has been making efforts to ensure financial market stability. third, in order to meet the biggest challenge for japan ’ s economy, which is the strengthening of the foundations for economic growth, the bank has been providing funds to private financial institutions that make lending and investment consistent with the policy goal. the funds are provided against collateral such as government securities, at a very low interest rate. with a view to making this framework more effective, in june 2011 the bank decided to establish a 500 billion yen new line of credit, through which it extends loans to financial institutions for their equity investments and the so - called asset - based lending ( abl ). the bank recognizes that japan ’ s economy faces the critical challenge of overcoming deflation and returning to a sustainable growth path with price stability. based on such strong recognition, the bank will continue to consistently make contributions as the central bank through the three - pronged approach that i have explained. bis central bankers ’ speeches