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, 18 april 2018. * * * good morning. senior deputy governor wilkins and i are happy to be with you to answer your questions about today ’ s interest rate announcement and our monetary policy report ( mpr ). before taking your questions, let me briefly offer a few insights into governing council ’ s deliberations. inflation is on target and the economy is operating close to potential. that statement alone underscores the considerable progress seen in the economy over the past 12 months. that said, interest rates remain very low relative to historical experience. this is because the economy is not yet able to remain at full capacity on its own. furthermore, the sustainability of this level of activity is not assured ; although we expected the economy to moderate in the second half of 2017, that moderation has extended into early 2018 and has been more pronounced than expected. governing council considered recent economic data very carefully and concluded that the softness early this year was due mainly to two temporary factors. the first relates to changes to mortgage rules that went into effect at the start of the year. these caused house sales to be pulled forward into the fourth quarter of 2017. although we are still expecting the housing sector to moderate in 2018 compared with last year, we can expect a partial recovery of activity in the second quarter. the second factor is the unexpected drop in exports during the first quarter, much of which was related to transportation bottlenecks. this points to a partial recovery in the second quarter and later in the year. notice that we are expecting only a partial recovery in the level of exports — an issue i will return to in a moment. accordingly, we expect a strong rebound in the second quarter after a lacklustre first quarter, with an average growth rate of about 2 per cent in the first half of the year and a return to nearpotential growth thereafter. fiscal stimulus, both provincial and federal, is playing a role in this forecast. we will be monitoring the data for the second quarter very closely in the weeks ahead. assuming our forecast remains on track, it is governing council ’ s view that interest rates will need to move higher over time to keep inflation on target. we acknowledge that the forces weighing on the economy mean that monetary policy is likely to remain stimulative to some

employment and improved living standards. the fsb was born of necessity in the aftermath of the financial crisis. its raison d ’ etre stems from one overarching fact : the global financial system is highly integrated. 2 financial institutions and markets are interconnected and interdependent within and across various the fsb grew out of the financial stability forum ( fsf ), founded in 1999 by the g - 7 in the wake of the financial crises in asia, latin america and russia. bank of canada deputy governor timothy lane, in his 2013 speech, “ financial stability in one country? ” argues that because of global financial integration, it is impossible to achieve financial stability in one jurisdiction by focusing exclusively on domestic considerations. bis central bankers ’ speeches sectors, including banking, insurance, and pension and investment funds, and, increasingly, across national jurisdictions. thus, to achieve a comprehensive and coherent approach to the financial regulation and oversight necessary to attain the global public good of financial stability, coordination is essential across countries, across all of the elements of the reforms, and across many different regulators and supervisors. failure to coordinate would lead to the fragmentation of the financial system, which would impede the global recovery. this need for effective coordination is why the g - 20 established the fsb in 2009. 3 what is the fsb? the fsb is not only the newest, it is by far the smallest – with only about 25 full - time staff – and probably the least well known of the major international organizations. 4 these include such postwar heavyweights as the international monetary fund ( imf ), the world bank and the organisation for economic co - operation and development ( oecd ). it is an international organization like no other : • its membership is composed of national financial authorities from 24 countries, including g - 20 members and other significant financial jurisdictions such as switzerland and singapore. 5 an important innovation is that it also includes international financial institutions such as the imf, the world bank and the bank for international settlements, as well as international bodies that set standards for banking, insurance, securities and accounting. 6 • the fsb punches well above its weight by levering the knowledge of its 70 member agencies, which are home to several thousand financial sector experts. it is these experts who do most of the heavy lifting, sitting on committees and working groups to develop policy and conduct peer reviews of implementation, supported by the small fsb secretariat. • at the fsb, decision making is based on