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, 21 october 2015. * * * good morning. we are happy to be here to answer your questions about today ’ s interest rate announcement, and our october monetary policy report ( mpr ). we will begin with a few remarks about the issues that were most important to the governing council ’ s deliberations. let ’ s start with the global context. we expect the global economy to strengthen over the next couple of years, although on a lower path than predicted in our last mpr in july. growth is being supported by accommodative monetary policy and the positive effects of low oil prices in a number of economies. the u. s. economy continues to strengthen largely as we expected, shaking off the temporary factors that held it back earlier in the year. we see particular strength in areas that are important to canadian exports, such as business investment. however, we also see weaker growth prospects in a number of emerging - market economies, particularly china. governing council spent a lot of time discussing what this means for canada. there has been volatility in financial markets and downward pressure on the prices of many commodities that canada sells. china is transitioning to a lower and more sustainable long - term growth path. while this transition may not happen in a straight line, china should continue to be a solid source of growing demand for commodities. if you look at chart 8 of the mpr, for example, you ’ ll see that chinese imports of copper are still rising strongly in volume terms. nonetheless, there is downside risk for some emerging - market economies, particularly in the context of u. s. monetary - policy normalizing. in our discussions, we thought it was important to keep in mind that many of these countries have become more resilient in recent years : they have been restructuring their economies, strengthening their fiscal positions, and moving to more flexible exchange rates. given these factors, if uncertainty fades about the prospects for china and other emerging markets, there is some upside risk to our commodity price assumptions, with implications for canada. let ’ s now turn to canada. while the first half of the year was weak, there are clear signs of a pickup in growth. taken as a whole, the second half should see growth in line with our july outlook

noted, monetary policy draws the most headlines. what is monetary policy, exactly? simply put, it consists of central bank actions aimed at influencing interest rates and financial conditions more generally. its purpose is to help foster a healthy economy. but monetary policy cannot, by itself, create a healthy economy. it cannot, for instance, educate young people, generate technological breakthroughs, make workers and businesses more productive, or address the root causes of inequality. fundamentally, the energy, ingenuity, and know - how of american workers and entrepreneurs, along with our natural resources, create prosperity. regulatory policy and fiscal policy — the decisions by the administration and the congress about how much and how the government spends, taxes, and borrows — can influence these more fundamental economic pillars. i ’ ve said what monetary policy cannot do. but what can it do? it can lean against damaging fluctuations in the economy. nearly 40 years ago, the congress set two main guideposts for that task — maximum employment and price stability. we refer to these assigned goals as our dual mandate. when the economy is weak and unemployment is on the rise, we encourage spending and investing by pushing short - term interest rates lower. as you may know, the interest rate that we target is the federal funds rate, the rate banks charge each other for overnight loans. lowering short - term rates in turn puts downward pressure on longer - term interest rates, making credit more affordable — for families, for instance, to buy a house or for businesses to expand. similarly, when the economy is threatening to push inflation too high down the road, we increase 1 / 5 bis central bankers'speeches interest rates to keep the economy on a sustainable path and lean against its tendency to boom and then bust. but what exactly do the terms “ maximum employment ” and “ price stability ” mean? does maximum employment mean that every single person who wants a job has a job? no. there are always a certain number of people who are temporarily between jobs after having recently lost a job or having left one voluntarily to pursue better opportunities. others may have just graduated and have started looking for a job or have decided to return to working — for instance, when their child starts school. this so - called frictional unemployment is evident even in the healthiest of economies. then there is structural unemployment — a difficult problem both for the people affected and for policymakers trying to address it. sometimes people are ready and willing to work, but their skills, perhaps because