interest rates and by the moderation in energy prices. the exact timing of the u. s. recovery, however, remains uncertain and will depend importantly on how consumer confidence evolves in that country. here in canada, the latest national accounts data, which incorporate revisions to the growth profile in the first three quarters of last year, show that the level of economic activity was not quite as high at the end of 2000 as we had estimated earlier. and, based on more recent indicators, the pace of economic expansion in the first quarter of 2001 will be slower than in the final three months of last year. we can see this clearly in the automobile industry, where there have been production cutbacks mainly in response to weaker demand and excess inventories in the united states. electronic goods and telecommunications products are two other areas where activity has slowed - although from very high levels - and where world production has been running ahead of demand. all three are high - profile sectors. so naturally they attract a lot of attention, especially in parts of canada where there is a heavy concentration of these industries. but to keep things in perspective, there is still considerable strength in a number of other areas that are important to our economy. for example, investments in the energy sector and orders in the aerospace industry here in quebec are extraordinarily strong. or take retail sales other than autos, or housing, or non - residential construction : in all those areas, and in most other service industries, the level of activity remains high. when we considered the balance of this evidence earlier this month, we concluded that there was, in the near term, room for greater monetary stimulus without putting pressure on capacity and inflation. therefore, we lowered the bank rate by 50 basis points on 6 march, bringing the total decline since january to 75 basis points. in taking this action, we also considered the uncertainties attached to the timing and extent of the expected recovery in the united states and their implications for growth of total demand in canada. the bank continues to believe that the reduction in our interest rates and rising disposable incomes, bolstered by recent tax cuts, should help to support the expansion of domestic demand in canada in the second half of the year. this additional stimulus to economic activity is consistent with keeping the core rate of inflation close to the 2 per cent midpoint of the 1 to 3 per cent inflation - control target range. as for total cpi inflation, we still expect it to move down to about 2 per

mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, 19 january 2011. * * * good morning. tiff and i are pleased to be here with you today to discuss the january monetary policy report, which the bank published this morning. the global economic recovery is proceeding at a somewhat faster pace than the bank had anticipated, although risks remain elevated. private domestic demand in the united states has picked up and will be reinforced by recently announced monetary and fiscal stimulus. european growth has also been slightly stronger than anticipated. however, ongoing challenges associated with sovereign and bank balance sheets will limit the pace of the european recovery and are a significant source of uncertainty to the global outlook. some emerging markets have begun to implement more restrictive policy measures in response to overheating in their economies. the effectiveness of these policies will influence the path of commodity prices, which have increased significantly since october. the recovery in canada is proceeding broadly as anticipated, with a period of more modest growth and the beginning of the expected rebalancing of demand. the contribution of government spending is expected to wind down this year, consistent with announced fiscal plans. stretched household balance sheets are expected to restrain the pace of consumption growth and residential investment. in contrast, business investment will likely continue to rebound strongly, owing to stimulative financial conditions and competitive imperatives. net exports are projected to contribute more to growth going forward, supported by stronger u. s. activity and global demand for commodities. however, the cumulative effects of the persistent strength in the canadian dollar and canada ’ s poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of canada ’ s current account deficit to a 20 - year high. overall, the bank projects the economy will expand by 2. 4 per cent in 2011 and 2. 8 per cent in 2012 – a slightly firmer profile than had been anticipated in october. the bank continues to expect that the economy will return to full capacity by the end of 2012. underlying inflationary pressures remain subdued, reflecting the considerable slack in the canadian economy. core inflation is projected to edge gradually up to 2 per cent by the end of 2012, as excess supply in the economy is slowly absorbed. inflation expectations remain well - anchored. total cpi inflation is being boosted temporarily by the effects of provincial indirect taxes, but is expected to converge to the 2 per