the uk has enjoyed since the new monetary framework was put in place. but a fairer measure of the mpc ’ s success is perhaps the fall in inflation expectations since may 1997 ( which can be derived from prices of government bonds ) which has brought the cost of long - term borrowing down to historically low rates. i think that this provides some measure of the growing credibility of the monetary policy framework ; and the expectation that we have moved into an era where we can expect low and stable price conditions. core purpose : financial stability i will say more later about the current position of the uk economy, but first i would like to say something about the other functions of the bank which are perhaps less familiar than the mpc. the bank ’ s second core purpose is maintaining the stability of the financial system. the bank is no longer responsible for the supervision of individual firms but has a clear interest in ensuring the financial system functions smoothly. as the asian crisis in 1998 and the problems in japan show, dislocation of the financial system can impose significant economic costs and it is the bank ’ s role, looking at the system as a whole, to identify potential threats and vulnerabilities. in some respects this interest is integral to the bank as a central bank. for example, secure and efficient payment and settlement systems are an essential condition for economic growth, providing the means for money to flow between individuals, businesses and government. like other essential services - electricity, water - it is easy to take payment systems for granted. but the amounts involved are huge : 30mn transactions are processed every day in the uk clearing system, the value of which totals over £800bn every week. these payments ultimately result in transfers between settlement banks across accounts which they maintain at the bank of england. a failure in the payment system could have an immediate impact on the economy and the bank has worked with clearing banks to reduce the risk to the financial system, first by the introduction of real - time gross settlement and now by moving towards delivery versus payment in securities markets. less esoteric, perhaps, is our interest in the financial stability of individual firms and the structure of the financial system as a whole. while responsibility for individual firms lies with the fsa, the bank takes a close interest in the impact on the wider economy of the regulatory structure and the links between individual institutions and markets. the bank also has a direct role as lender of last resort. in the event that a bank has liquidity difficulties that might

tiff macklem : opening statement before the house of commons standing committee on finance opening statement by mr tiff macklem, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 18 april 2023. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report ( mpr ). last week, we maintained the policy rate at 4a½ % as we continue to assess whether monetary policy is restrictive enough to return inflation to our 2 % target. since the last time we were here with you, we've seen a steady improvement in inflation and modest economic growth. inflation is coming down quickly - data this morning show it fell to 4. 3 % in march. and we forecast it to be around 3 % this summer. we are encouraged by that, but we are also seized with the importance of staying the course and restoring price stability for canadians. several things still have to happen to get inflation all the way back to the 2 % target. inflation expectations have to come down further, services price inflation and wage growth need to moderate, and corporate pricing behaviour has to normalize. we are focused on these indicators, and the evolution of core inflation, to ensure that consumer price index ( cpi ) inflation continues to progress toward the target. if monetary policy is not restrictive enough to get us all the way back to the 2 % target, we are prepared to raise the policy rate further to get there. before i take your questions, let me give you some economic and financial context for the decision. the canadian economy remains in excess demand. gross domestic product ( gdp ) growth in the first quarter of the year appears stronger than we projected in january, and the labour market is still tight. the unemployment rate, at 5 %, remains near its record low, and wages continue to grow in the 4 % to 5 % range. employment growth has been surprisingly strong, reflecting continued demand and increases in labour supply. past policy rate increases are working their way through the economy and restraining demand. households are slowing their spending, particularly on big - ticket items. as mortgages are renewed at higher rates, more households will feel the restraining effects of monetary policy. taking these forces into consideration, we expect canadian gdp growth to be weak for the rest of this year before beginning to pick up gradually in 2024 and through 2025. what does all