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Total and core inflation were projected to average close to 2 per cent, beginning in the second half of this year. This projection assumed oil prices at roughly US$64 per barrel, a level then indicated by futures prices. Our projection also assumed stable commodity prices, government spending that was growing roughly in line with revenues, and a Canadian dollar continuing to trade in a range of 85 to 87 cents U.S.

The Canadian economy continues to grow at a solid pace, supported by robust global growth, firm commodity prices, and strong domestic demand. At the same time, global competition and the past appreciation of the Canadian dollar continue to pose challenges for a number of sectors.

The ultimate goal of Canadian monetary policy is to help our economy achieve its maximum sustainable growth, and thus contribute to rising living standards for Canadians. The best way to achieve this goal, we've learned from experience, is to keep inflation low, stable, and predictable.

The world needs an international institution to promote a new monetary order—a well-functioning, market-based global financial system. This will be the subject of my remarks today.

These imbalances reflect the financial flows associated with mismatches in savings and investment on a global scale. Since the late 1990s, many economies outside the United States have increased their net national savings.

As economies have become more interconnected through trade and financial flows in a truly global marketplace, economic developments in one location can quickly have repercussions on the other side of the globe. In 1997, what began as a currency devaluation in Thailand became a crisis with repercussions not just in Asia, but in countries as far away as Russia, Brazil, and Canada.

Canada and Barbados may not have much in common in terms of climate, but we both have very open economies. So we both rely on good economic performance globally for good performance domestically.

World economic growth has been remarkably strong over the past three years, averaging close to 4 1/4 per cent, and it is expected to stay around 4 per cent this year and next.

The Canadian and world economies are evolving essentially in line with the Bank's expectations, and the outlook for growth and inflation in Canada is similar to that in the October MPR. Canada's economy continues to adjust to global developments and to the associated changes in relative prices.

The constant economic change that we've been experiencing makes it critical for the central bank to stand on a firm foundation as it works to enhance the country's economic strength. The Bank of Canada's monetary policy framework is such a foundation.