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Our primary objective at the Bank is to promote the economic and financial welfare of Canadians. Over the years, we have learned that the best contribution that monetary policy can make in this regard is to give Canadians confidence in the future value of their money. We do this by keeping inflation low, stable, and predictable.

The Bank of Canada has a mandate to “promote the economic and financial welfare of Canada,” primarily through the conduct of monetary policy and promotion of a safe, sound and efficient financial system. Understanding the macroeconomic and financial system impacts of climate change and the transition to a low-carbon economy is therefore a priority for the Bank.

While conditions in the Canadian economy have improved since we met with you in February and April, many of the basic challenges remain. Before Paul and I take your questions, I would like to give you some of the highlights from our latest Monetary Policy Report, released last week.

We provide an updated evaluation of the value of various measures of core inflation that could be used in the conduct of monetary policy. We find that the Bank of Canada’s current preferred measures of core inflation—CPI-trim, CPI-median and CPI-common—continue to outperform alternative core measures across a range of criteria.

Canadian firms’ expectations for high inflation may be influencing their price setting, supporting strong price growth and delays in the transmission of monetary policy. Using data from the Business Outlook Survey, we investigate the reasons behind widespread price growth seen in Canada in 2021 and early 2022.

During and after the Great Recession of 2008–09, conventional monetary policy in the United States and many other advanced economies was constrained by the effective lower bound (ELB) on nominal interest rates. Several central banks implemented large-scale asset purchase (LSAP) programs, more commonly known as quantitative easing or QE, to provide additional monetary stimulus.

In order to hone its focus on a safe and sound financial system, reinforce research, and streamline management processes, the Bank of Canada has realigned responsibilities and made a series of senior appointments to lead its work in monetary policy, financial stability, management of the Government of Canada's funds, and Canadian bank notes.

In a speech to the Canadian Society of New York, Bank of Canada Governor David Dodge said today that Canada's monetary policy framework, based on an explicit inflation-control target and a flexible exchange rate, "has contributed importantly to putting the Canadian economy back on the right path to longer-term prosperity."

How do deglobalization and rising trade costs affect monetary policy? A two-country, multi-sector model of Canada and the United States shows that bilateral trade-cost shocks generate a manageable inflation–output trade-off under the existing framework — but larger or more persistent shocks would make look-through policies costlier and riskier.