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This year also marks the 70th anniversary of the creation of the Bank of Canada, and we too have taken the time to celebrate our contributions to Canada. At such times, while it is appropriate to look back and celebrate history and accomplishments, it is also a good opportunity to look forward and think about where we are headed. In this spirit, I'd like to talk to you today about one of our main responsibilities; that is, the conduct of monetary policy.

In a speech to the Speakers Forum, Bank of Canada Governor David Dodge said today that Canada's macroeconomic policy framework is protecting the economy from both persistently high inflation and the threat of deflation.

We document the macroeconomic patterns that characterize labor market recovery from financial crises. Using a sample of postwar recession episodes from around the world, we show that financial crises are typically followed by jobless recoveries, with a sluggish recovery in employment relative to output.

Uncertainty about the level of future inflation adversely affects the economy because it distorts the savings and investment decisions of households and businesses. Since these decisions typically involve planning horizons of many years, the adverse effects from inflation uncertainty can be reduced by adopting a policy framework that makes future inflation more predictable over long time horizons. When the inflation-control target was renewed in May 2001, the agreement affirmed that monetary policy will be directed at moving inflation to the 2 per cent midpoint of the target range over a six-to-eight-quarter horizon. The author describes how this policy commitment increases the predictability of average inflation over periods longer than one year. This relationship is illustrated using the Canadian experience from the inflation-targeting period.

Deputy Governor Toni Gravelle discusses the latest interest rate decision along with how immigration helps Canada’s economy and how it impacts inflation.

In a speech to the Saskatoon and District Chamber of Commerce, Bank of Canada Governor David Dodge said today that Canada's inflation-targeting system has led to many benefits for the Canadian economy. The Governor detailed those benefits, which were confirmed when the Bank and the Government of Canada renewed their inflation-control agreement last year.

Bank of Canada Governor David Dodge said today that Canada's experience under inflation targeting has been "unambiguously positive" since the central bank and federal government agreed to adopt this monetary policy framework in 1991.

This note presents PULSE, a new measure of underlying inflation in Canada based on a dynamic factor model estimated on disaggregated inflation data. PULSE captures the persistent component of inflation and decomposes it into broad-based and sector-specific inflationary pressures.

The war in the Middle East is affecting the Canadian economy in several ways. Inflation will be higher in the near term, but the magnitude and persistence of the increase is uncertain. The net impact on growth is expected to be small.

The goods and services sectors have experienced considerably different dynamics over the past three decades. Our goal in this paper is to understand how such contrasting behaviors at the sectoral level affect the aggregate level of trend inflation dynamics.