Finance committee  Yes I do and I'd like to make a few other comments. The exchange rate is an indigenous variable insofar as there are several factors which determine the dollar's movement. A rising dollar reflects, for example, the strength of the world economy, and the progression towards higher-priced commodities.

Finance committee  Let me be brief, but talk generally and then more specifically about productivity. When we put together the projection that goes into our monetary policy report, we draw on analysis from a number of different sources, including our regional offices that are constantly in contact with provincial governments and businesses across the country.

Finance committee  What's being produced in the economy.

Finance committee  I don't have all the details of growth rates across the G-8 countries, but certainly we are expecting Canada to be one of the better-performing economies among the G-8, based on the projection we presented in today's monetary policy report.

Finance committee  Let me address that. This is an important area and one we've given quite a bit of attention to in terms of looking at the balance sheet of the household sector and working through different scenarios in terms of how that balance sheet might be affected, for example, by increases in interest rates or declines in house prices.

Finance committee  Let me start by noting that the governor referred to the 1970s and 1980s and the boom-bust cycles we went through in those years. If you compare the last 10 years to that earlier episode, we've actually gone through substantial shocks. A lot of those have had an international origin or dimension to them.

Finance committee  There is a conceptual difference between the factors affecting inflation in the medium term, such as the balance between supply and demand, and factors such as a cut in the GST, which have a temporary impact on prices. As the governor mentioned, we see a current effect of 0.5% on the CPI, but within a year, this impact on the growth rate should no longer be visible.

Finance committee  We have set a target of 2% with a range of 1% either way, but we are aiming for a total CPI growth of 2%. A large contributing factor to the efficiency of monetary policy is the expectancy regarding inflation. By setting a specific target, inflation is expected to be about 2%. This is a very important factor.

Industry committee  I'll speak briefly to two points. There are clearly problems but the increase of energy prices is calculated in American dollars. The increase in Canadian dollars is therefore not as high because of the appreciation of the Canadian dollar. That's a rather significant point. Second, in terms of the ability of the manufacturing sector to react, as I mentioned, it's important to react by investing in machinery and equipment, in order to increase productivity and flexibility.

Industry committee  That was certainly no comment on the monetary policy going forward.

Industry committee  Okay, let me start off on that exact point. The U.S. current account deficit is in the order of 6% to 7% of U.S. GDP. Of course, that's a situation each year. So with each year of deficit, the U.S. is adding to its level of indebtedness to the rest of the world, and that level of indebtedness is now substantially larger than it was 10 years ago.

Industry committee  Yes, very quickly. This is a document that's included in what we've handed out. Our regional offices go out and talk to companies on a regular basis in terms of not only how they see the outlook, but also how they're adapting to the sorts of global pressures you've identified. Certainly, one area that stands out is a response in terms of increasing their investment in machinery and equipment to increase productivity and regain some of that competitiveness you're talking about, in response to the appreciation of the Canadian dollar.

Industry committee  I would simply like to add that the global economy, since 2003, has experienced a period of growth without precedent in the post-World War II era. In the past four years the growth rate of the global economy was above 4 per cent, and it is likely this level will be sustained both this year and the next.