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Good afternoon. It’s a pleasure to be back at the Empire Club to deliver my first speech of the year. And what a year it’s shaping up to be. Last week, the Bank of Canada held its policy rate at 2¼%—and we had two key messages. First, our economic outlook has not changed much since last fall, but uncertainty around our forecast has increased. We continue to expect the Canadian economy to grow modestly and inflation to stay close to the 2% target. But geopolitical risks are heightened, and US trade policy remains unpredictable. Second, the Canadian economy is adjusting to US protectionism. Canadian businesses are looking for new suppliers and new markets. This restructuring, which includes shifting our trade and integrating our internal market, will take some time. But in time, it will strengthen our economy. Today, I want to focus on this second theme—structural change and what it means for the Canadian economy. Canada is at a crossroads. The era of rules-based open trade with the United States is over, the potential of artificial intelligence (AI) looms large, and our demographics are shifting. The impact of these forces on the Canadian economy will not be a temporary cyclical fluctuation. These are deep structural changes that are transforming the economic landscape. And how Canada responds—which road we take—will define our economic future. The Bank of Canada needs to understand the economic implications of structural change to deliver on our mandate—low and stable inflation. Governments need to understand it to direct public investment, encourage private investment and use industrial policy to capitalize on our economic strengths. Businesses need to understand it to develop new markets and products, invest in productivity-enhancing technology and help their workers gain skills for the future. And Canadians need to understand it so they can see the opportunity, while managing what could be difficult adjustments along the way. That’s a lot to navigate in a short s BoC's Gov. Macklem: Transition to new economy could be more painful than we'd like. BoC's Gov. Macklem: Lowering rates in face of weak economy could stoke inflation if the weakness is due to lower productive capacity instead of a cyclical downturn in demand.