talks. it is essential for all countries to see the common interest in reducing trade barriers, and to work multilaterally through the wto to accomplish this. large emerging - market economies need to play their part. but so does the g - 7. this means we need to be willing to talk seriously about agricultural issues. i know that, politically, this is a hard sell here in the heartland of america, as it is in many parts of canada. but the global economy needs leadership in order to restart these talks, bring them to a successful conclusion, and reduce the threat of protectionism. let me now turn to the imf. it has become quite common these days to question the relevance of this institution. some people say that the imf should be scrapped, because countries now have ready access to private capital flows in global markets and no longer need to borrow from the fund. indeed, those countries that have imf loans are scrambling to repay them as quickly as possible. but this viewpoint ignores the fund's original mandate to promote international monetary co - operation by providing the machinery for consultation and collaboration on international monetary problems. the question then becomes, how can the imf best fulfill this role today? i would argue that, given the fund's structure, its worldwide perspective, and its considerable expertise, there are important ways for the fund to do this. it can improve its surveillance function and, in doing so, it can more effectively engage the national authorities of all countries. what do i mean by " improving surveillance? " to answer that question, it's best to have some context. in earlier decades, the fund would have a dialogue with individual member countries about whether that country was following policies consistent with a fixed exchange rate regime and, under certain circumstances, the appropriateness of the fixed rate itself. but following the collapse of the bretton woods system in the early 1970s, surveillance naturally moved away from a narrow focus on exchange rates. for countries that were borrowers – or potential borrowers – from the fund, discussion focused mainly on the conditions that a country would need to meet in order to access imf funding. it certainly had little to do with the policies needed to enhance stability and to facilitate domestic and global adjustment. it is clear that today there is a need to refocus surveillance on policies that enhance domestic economic stability, and thereby, support global stability. surveillance should be confined to a country's exchange rate, monetary, fiscal, and financial policies,

just mean slower growth in gdp, it also means a reduction in the economy ’ s potential, although to a lesser extent. when you add it all up, we project the output gap will close toward the end of 2017, somewhat later than we forecast in april. the uncertainty around potential output remains high because it is not clear how much productive capacity will ultimately be rebuilt as the economy strengthens. in terms of inflation, we project it will average 2 per cent in 2017, as the output gap gradually closes. our judgment about the inflation process is supported by two staff papers published today. the first finds that wage pressures are subdued relative to historical experience, largely consistent with the existing slack in the labour market. the second focuses on structural factors that help explain recent movements in the prices of consumer energy products, food and services. finally, as usual, we see a number of risks to our inflation outlook. we judge these risks to be roughly balanced. the overall climate, however, is one of heightened uncertainty. in a context of continued weak investment at the global level, any additional uncertainty has the potential to keep businesses on the sidelines longer. not surprisingly, governing council also spent some time talking about housing. we continue to have the same concerns that we expressed in our june financial system review about household indebtedness and housing, particularly in the greater vancouver and toronto markets. the circumstances that the canadian economy is facing make the bank ’ s risk - management approach to monetary policy particularly valuable, because the types of uncertainties we see cannot readily be incorporated into projections. in light of all these considerations, the governing council maintained the target for the overnight rate at 0. 5 per cent. with that, governor poloz and i would now be happy to answer your questions. bis central bankers ’ speeches