control targets and a flexible exchange rate have worked well and continue to make sense for canada in the foreseeable future. openness, transparency, and public communications so far, i have explained why i consider an ongoing commitment by the bank to low and predictable inflation to be of paramount importance to sustained strong economic performance in canada. i have also outlined why i think that the bank should continue to pursue the objective of low inflation within the current framework of inflation targets supported by a floating exchange rate. all this is fine, you may say, but how will the bank ensure that it continues to deliver a credible, effective monetary policy? in a world subject to all kinds of shocks, and with financial markets increasingly more open and globalized, there are no guarantees that monetary policy will be successful at all times and under all circumstances. still, it helps if those who are affected by policy decisions — the financial markets and the general public — understand what their central bank is doing, and why. put another way, central bank actions will likely be more successful if they are better understood and more predictable. financial markets will then likely respond more effectively, and indeed anticipate, monetary policy actions. and the general public will be better able to take monetary policy into account when making plans for the future. transparency actually leads to better policy outcomes. in canada, the move towards greater openness, transparency, and accountability in monetary policy received a big boost with the adoption of the inflation targets in 1991. the targets established a clear objective for monetary policy. and they set a precise yardstick for measuring the bank of canada's success in meeting that objective. the bank's explicit inflation target and our commitment to achieving it, have provided strong incentives for us to be as candid as possible about the external and domestic developments that are likely to influence inflation and the ability of monetary policy to respond to them. under the stewardship of my predecessor, governor thiessen, who placed particular emphasis on encouraging greater openness and more effective two - way communications, the bank made important strides in this area. today, we provide large amounts of data and commentary on monetary policy in our regular publications and on our web site. we also discuss the outlook for the economy, inflation, and monetary policy in the monetary policy report, the updates to the monetary policy report, and in speeches by bank officials. our latest initiative to improve public understanding of the bank's actions is the adoption of a system of fixed dates for the announcement of

decisions on the bank rate. the press release that we issue on each of these dates gives our latest assessment of the economy and the rationale for changing or not changing the bank rate. communication, however, goes both ways. the bank also needs to understand what is happening in the markets and in all key sectors of the economy and across the regions. we need your input, your information, and your views. we can only formulate good policy if we are good listeners. so i encourage you to talk to us. the phone lines and doors at our regional offices, here in toronto and across the country, are open. recent economic developments constructive two - way communication is particularly critical in times of increased uncertainty about the future. so let me now say a few words about how the bank views the current economic situation. the canadian economy began 2001 from a strong base — expanding by an estimated 5 per cent, on average, in 2000 and with solid growth continuing right through the second half of last year despite the slowdown of the u. s. economy. in our last update to the monetary policy report, which was prepared on 23 january and released on 6 february, we revised down our projection for economic growth in canada this year to about 3 per cent, primarily because of the more abrupt weakening of u. s. economic activity. that projection assumed that the u. s. economy would expand by 2 to 2. 5 per cent, on average, in 2001, with a weak first half followed by a relatively strong rebound in the second half. when we released the update on 6 february, we pointed out that, on the basis of accumulating evidence, it appeared that u. s. economic activity in the first half of the year would be weaker than we had projected on 23 january, even though we still expected a reasonable rebound in the second half of the year. we noted that this posed some near - term risks for the canadian economic outlook. but, as we also pointed out then, despite the near - term uncertainties, the bank remains generally positive about canada's economic prospects for the year, given productivity increases and rising disposable incomes aided by tax cuts that are working to sustain domestic demand growth. of course, there are some sectors and regions of the country that will feel the effects of the u. s. slowdown more than others, for example, those with heavier concentration in the production of cars and equipment, notably equipment related to communications and information technology. offset