As I come to the end of my first year as Governor, it seems natural to look back and review some of the challenges and changes that have marked the past 12 months. The main economic concern of the past year was the slowdown that occurred not just here in Canada, but in most major economies.
At the same time, the rapid increase in public debts and the attendant difficulties in financing them have forced governments in a number of countries to tighten fiscal policy sharply to improve debt trajectories, further weakening economic activity.10 To offset the fall in demand, interest rates have been cut to almost zero in several countries.