tiff macklem : monetary policy decision opening statement by mr tiff macklem, governor of the bank of canada, at the press conference following the monetary policy decision, ottawa, ontario, 6 march 2024. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss today's policy announcement. this is the first time we're speaking to you on the day of a policy decision that is not accompanied by a monetary policy report ( mpr ), so it's a little different than what we're all used to. we want households, businesses and communities to understand the actions we are taking and why. so we'll be answering questions at every decision as part of our commitment to keep canadians informed. our quarterly mprs include a full economic outlook. our deliberations this time were based on how the economy and risks to the outlook have evolved compared with what we expected in january. in the six weeks since our january decision, there have been no big surprises. economic growth has remained weak, and inflation has eased further as higher interest rates restrain demand and relieve price pressures. but with inflation still close to 3 % and underlying inflationary pressures persisting, the assessment of governing council is that we need to give higher rates more time to do their work. with that in mind, governing council decided to maintain the policy interest rate at 5 %. we are also continuing our policy of quantitative tightening. in january, we indicated that our confidence had increased that our policy rate was high enough to restore price stability. while we could not rule out the need to raise rates further if there were new inflation surprises, we indicated that our discussions were shifting from whether our policy rate is restrictive enough to restore price stability, to how long it needs to stay at the current level. today's decision reflects governing council's assessment that a policy rate of 5 % remains appropriate. it's still too early to consider lowering the policy interest rate. recent inflation data suggest monetary policy is working largely as expected. but future progress on inflation is expected to be gradual and uneven, and upside risks to inflation remain. governing council needs to see further and sustained easing in core inflation. before taking your questions, let me take a moment to discuss how the economy is evolving. global growth has slowed and inflationary pressures have continued to ease. the us economy also slowed but has remained surprisingly strong even as inflation has continued to decline. 1 / 2 bis -

thus, helped with the significant but necessary adjustment. with the decline in the nominal exchange rate, our non - commodity sectors saw their competitive positions improve. they were therefore able to absorb some of the resources that were being quickly shed by the commodity producers. our floating exchange rate allowed us to achieve a decline in real wages without a decline in nominal wages and to hold inflation near our target. let me give you another example. in recent years, the demand for and the prices of canadian commodity exports have been rising sharply. this has helped to create an economic boom, and investment flows into canada have increased. our floating dollar has appreciated sharply and thus, has forced some necessary adjustments. as their competitive positions improved, our commodity producers have been able to absorb some of the resources that were being shed by the noncommodity sectors, which have seen their competitive positions deteriorate. as a result, we've seen a shift in relative wages without fueling inflation. thus, the flexible exchange rate has again helped the economy to absorb shocks and has allowed the bank of canada to keep inflation near the 2 per cent target. adjustment is never easy, but on balance, a flexible exchange rate regime has definitely helped canada to maintain production close to full capacity and to minimize the effects of the boom - bust cycles in various sectors. a floating exchange rate can bring a number of important benefits, but as i said, there are other important components of a sound policy framework. a well - functioning domestic financial system is crucial to achieving efficient domestic allocation of capital and to dealing with external shocks. that is why policy - makers around the world have been putting a lot of emphasis on improving domestic banking and financial systems. organizations such as the g - 7, the g - 10, and the financial stability forum have all examined ways to improve financial system stability. and for his hard work in this area, i'd like to congratulate tim geithner of the u. s. federal reserve, who is also your next speaker. with all of these efforts, we have seen some real improvements in financial system stability in recent years. since the 1990s, countries have also found that it's very important to develop domestic markets for debt, for their own protection, as well as for the good of the global economic system. and in this area, we have also seen some real signs of progress. a decade ago, with the peso crisis still fresh in people's minds, who would have believed that mexico