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, 9 january 2019. * * * good morning. i am pleased to be here to answer your questions about today ’ s interest rate announcement and our monetary policy report ( mpr ). before taking your questions, let me offer a short summary of governing council ’ s deliberations. a lot has happened since our last mpr in october. for one thing, the us - led trade war is beginning to have negative economic consequences. global financial markets have reacted — bond yields have fallen, yield curves have flattened even more and stock markets have repriced significantly. here in canada, lower oil prices have reached the point where they will have material consequences for our macroeconomic outlook. and, our housing sector is taking longer than expected to stabilize. it is natural to focus on the latest fluctuations in the economic data. but governing council also spent a good deal of time reviewing our starting situation to ensure that these new developments are put into appropriate context. is the world economy moderating? yes : this has been in our forecast for some time. the us economy has been growing well above potential because of fiscal stimulus. our estimates, as shown in chart 1 of the mpr, show that us private sector economic growth has been slowing since early 2018 and will continue to slow this year. china ’ s economy has also been transitioning to a more sustainable pace of growth, and recent policy actions are an attempt to counter the effects of its trade conflict with the united states. in fact, the adverse effects of tariffs on growth are beginning to show up in the world economy as a whole. our forecast is for global growth of 3. 4 per cent in 2019 — the same figure we had in october — but this is a material moderation from 3. 7 per cent in 2018. is the canadian economy moderating? yes : 2017 was a very strong year with 3 per cent growth, which is well above our potential. back in october, we were expecting about 2 per cent for 2018 and about the same for 2019. the economy has been operating essentially at its full capacity for about 18 months now, and inflation has been running on target. the labour market has been performing well — not as strong as in 2017, but very solid nonetheless — and unemployment is as low as we have ever

are part of our day - to - day lives in one way or another. how they function and how they may change matters a great deal not just to your industry but also to most canadians. our financial wealth is connected to benchmarks. for example, exchange - traded funds and mutual funds may invest in products linked to benchmarks. and mortgage costs are based on bank funding costs, which, in turn, include inputs priced off derivatives contracts using benchmarks. so, reforming this foundational element of our financial infrastructure is critical to both the financial industry and the broader economy. indeed, we ’ re long overdue for an upgrade. in my remarks today, i ’ m going to discuss the work afoot to either validate, enhance or transform various widely used benchmarks or create new ones. i ’ ll start with an overview of the work under way globally and then focus on what is being done in the united states and canada. the current state of play aside from our primary role in setting monetary policy to meet our inflation target, our mandate at the bank of canada includes fostering the stability and efficiency of the financial system. benchmarks contribute to the efficient functioning of markets and the stability of the system. getting them right matters. the bank of canada is playing a role in these changes through our active membership on the financial stability board ( fsb ), which is leading the global effort to coordinate benchmark reform. central banks are trusted by market participants and they keep a watchful eye on risks to financial stability, so it ’ s important that we be involved in this work. to be effective, a benchmark should be robust, reliable and resilient to any market stress. it also needs to be transparent and consistent with the principles for financial benchmarks set out by the international organization of securities commissions ( iosco ). these principles cover governance, quality and accountability. they stress that the data used to construct benchmarks “ should be based on prices, rates, indices or values that have been formed by the competitive forces of supply and demand and be anchored by observable transactions. ” the major upgrades that have taken place since 2014 have been guided by the iosco principles as well as by improvements to libor and other benchmarks recommended by the fsb. the fsb is also urging countries to develop new benchmarks based on shortterm, risk - free ( or near risk - free ) observable rates or, where they already exist, to promote more active use