Finance committee  Thanks for highlighting that. You are very well informed. There was a little more lightning in my trip than I would have wished. Yes, this is a positive statement. Let me say a couple of things, if I may, and ask my colleague to expand. This is a process. This process of rebalancing the global economy, having cooperative solutions to do so in a way that's going to sustain global growth and ultimately enhance global growth in a sustainable manner, is something that is going to unfold over the course of years, as opposed to one meeting with a magic solution.

Finance committee  Well, while we don't give precise projections for the growth of nominal GDP—and certainly this committee would understand the revenue side of government finances, whether they're federal or provincial or closely tied to the growth of nominal GDP—it would be inconsistent to sustain that level of spending increase and be consistent with a gradual reduction in the level of deficits as have been planned on both the federal and provincial sides.

Finance committee  Thank you for your question. First, the bank has observed that there is presently heightened tension in the currency markets, that is clear. The global economy is in a difficult process, which is that economic activity and economic demand are being transferred from advanced countries to emerging countries.

Finance committee  We believe that one of the important downside risks to our projection is the possibility of a more abrupt correction in the housing market than we're anticipating. We're not forecasting an abrupt correction, but it is a possibility, given two factors: first, the speed with which house prices rose; and secondly, the absolute weight of debt in the economy that is tied to housing.

Finance committee  Let me begin by making absolutely clear that there are limits to the role of interest rates in addressing this issue, or more specifically, the role of the Bank of Canada's interest rate. We conduct monetary policy with the sole objective of achieving our inflation target and that's the agreement with the Government of Canada.

Finance committee  —CMHC mortgage insurance, as the government did earlier this year, when it introduced some restrictions on the use of high-loan-to-value mortgages for investment properties, it changed the qualifying interest rate, and it made some other adjustments. We are starting to see the effects of those adjustments on cooling activity in the housing market.

Finance committee  Thank you for the question, Mr. Brison. I'd make two distinctions. First, the bank's expectation with respect to economic growth has been that activity in the broad housing sector, meaning housing starts, renovations, and housing sales and the commissions that come from those, would decline markedly starting in the second quarter of this year and continuing over the course of this year.

Finance committee  Thank you very much, Chair. Good afternoon, members. It's my pleasure to be here and to formally introduce Tiff Macklem as senior deputy governor of the Bank of Canada. Tiff assumed his post, appropriately, on Canada Day this past year. We're very pleased to be here to discuss the bank's views on the economy and our monetary policy stance. l would like to give you some brief highlights from our latest monetary policy report, which was released last week.

Finance committee  Yes, we are able to do this and we will do this, if it is what the committee requests.

Finance committee  Let us talk about the rate of return curve. That slope is quite steep. Because of that, you will have a more extreme difference, historically speaking, between the overnight rate and the mortgage rate. Plus, the cost of borrowing of the institutions is a little higher in terms of the spread than you would have historically.

Finance committee  Very quickly, since you read my speech to the OEA, at the back end of that speech are references to some fairly sophisticated work the bank has done--which I'd be happy to distribute to the committee--on what happens if governments get that balance wrong. If they don't tighten fiscal policy appropriately and global interest rates spike up and potential growth is hit, it will also ultimately hit Canada.

Finance committee  I will make one point of clarification: the adjustments in rates have not been to the prime rate, but to the fixed rate mortgages of the banks, and what's relevant for the fixed rate mortgages for the banks is the funding costs fixed for the institutions. Over the course of the last several weeks, those funding costs have gone up, for two reasons.

Finance committee  I appreciate the question and thank you for it, in part because I think it is important for Canadians to understand that there is an agreement between the Government of Canada and the Bank of Canada that sets the mandate for the institution. We're accountable to fulfilling that mandate, but it is delegated authority from the people of Canada through the Government of Canada, and you're right: the inflation targeting regime has been in place through successive agreements since the early 1990s and does come up for renewal at the end of 2011.

Finance committee  We're able to grasp the overall macro impact of these measures, but....

Finance committee  Thank you very much. I would like to add to your commendations for Paul Jenkins. He had an outstanding career serving our country and was a tremendous help to me personally, and obviously to the institution as a whole, over the course of the last couple of difficult years. I do miss him, particularly at times like this.