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

and risks. it is not enough to look at individual business lines or products, but we should continue to focus on enterprise risk management that reflects each business and the interdependencies among them. moreover, supervisors should be dynamic and continue to evolve as the supervised firms do. finally, supervisors should continue to develop an industrywide, macroprudential perspective to understand the impact of the continuing evolution of the u. s. financial industry. to do this, supervisors need to continue to leverage our cross - firm, horizontal perspective to better understand how the industry is evolving and what it might mean for our objectives around safety and soundness of individual firms and the efficient provision of financial services for the economy as whole. 1 i would like to thank nicola cetorelli, bev hirtle, michael holscher, anna kovner, paul licari, jackie mccormack, siobhan sanders, joao santos, katherine tilghmanhill, and james vickery for helpful discussions and analytical work. 2 see getting it right : factors for tailoring supervision and regulation of large financial institutions, randal k. quarles, july 18, 2018. 3 see lessons from the financial crisis, william c. dudley, november 6, 2017, for reviews from a regulatory perspective ; early observations on improving the effectiveness of post - crisis regulation, randal k. quarles, january 19, 2018. federal reserve board, consolidated supervision framework for large financial institutions, december 17, 2012. 5 the latest ccar results can be found at www. federalreserve. gov / supervisionreg / ccar. htm. see dong choi, michael r. holcomb, and donald p. morgan, bank leverage limits and regulatory arbitrage : new evidence on a recurring question, federal reserve bank of new york staff report # 856 for evidence of risks - shifting in response to the imposition of the supplementary leverage ratio in the u. s. 7 see andrew g. haldane, “ multi - polar regulation, ” international journal of central banking, june 2015, 11 ( 3 ), 385 – 401 ; “ strengthening and streamlining bank capital regulation, ” robin greenwood, sam hanson, jeremy stein, and adi sunderam, brookings papers on economic activity, 479 – 565, fall 2017 ; “ bank capital allocation under multiple constraints, ” tirupam goel, ulf lewrick, and nikola tarashev