outlook for potential growth. estimates of these measures have always been imprecise but are especially difficult given the rapid changes wrought by the pandemic. in the projection, economic slack is absorbed in the second half of 2022. to help manage the uncertainty surrounding this assessment, we will be watching a broader spectrum of indicators of slack, including a range of labour market measures. the outlook for inflation reflects the dynamics of overall demand and supply in the economy, as well as a number of temporary factors. in recent months, consumer price index inflation has risen above the bank ’ s 1 to 3 percent target range. three major factors are behind this temporary strength, all related to the pandemic. first, gasoline prices rebounded from very low levels a year ago and are now above pre - pandemic levels. second, other prices that had fallen sharply last year with plummeting demand are now recovering to more normal levels with the reopening of the economy. and third, disrupted global value chains and pandemic - related supply constraints, including shipping bottlenecks and a global shortage of semi - conductors, have pushed up the prices for cars and some other goods. overall, supply bottlenecks are creating sharper movement in prices that is pushing inflation temporarily higher, and these supply issues now look more important than previously thought. as a result, inflation is now projected to be somewhat above the target band through 2021. but these temporary effects are forecast to dissipate near the end of this year and inflation is forecast to ease back toward 2 percent in 2022. we expect the factors pushing up inflation to be temporary, but their persistence and magnitude are uncertain, and we will be watching them closely. longer term, given our commitment to hold the policy rate at the effective lower bound until slack is absorbed, the economy is projected to move into modest excess demand, so inflation is slightly above target through 2023 before moving toward target in 2024. in sum, the reopening of the economy and the strong progress on vaccinations have given us reason to be more optimistic about the direction of the economy. but we are not there yet, and we are mindful that the process is likely to be bumpy, and some scars will remain. at today ’ s decision, the governing council judged that the recovery still needs extraordinary support from monetary policy. we remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation

scrambling to sell their financial assets — even those normally considered risk - free, such as government of canada bonds — so they could meet their margin calls and build up their cash buffers. with this dash for cash so widespread, everyone was looking to sell assets and few were willing to buy. markets came under extreme stress and seized completely. households and businesses also became extra cautious : companies were drawing down their lines of credit at an unusually fast pace, and households were building up their savings or deferring loan payments. at the height of the crisis, the bank ’ s top priority was to quickly restore well - functioning markets so that households, businesses and governments could still access credit — either directly from markets or from banks and credit unions. the bank was well positioned for this challenge. as a central bank, we have a mandate to be on the look - out for system - wide stresses, and we have the tools — that leverage our balance sheet — to fix them. i would like to emphasize, however, that our decision to act was not something we considered lightly. there is a high bar for using these extraordinary tools. the last time we stepped in to address issues like these was more than a decade ago, during the global financial crisis. with that in mind, i ’ ll begin by reviewing how the bank responded to market - wide stress. then, i ’ ll talk about the thinking behind our actions and update you on the status of our facilities because markets returned to working normally some time ago. our actions have grown the bank ’ s balance sheet substantially. so i ’ ll close by discussing some policy implications of this and what my governing council colleagues and i are considering as we explore how the balance sheet could evolve from here. how we responded to market - wide stress let me first expand a bit more on what happened when covid - 19 struck. by early last march, as the world was realizing we were in a global pandemic, uncertainty and fear gripped markets. a dash - for - cash mentality took hold across financial market participants, and liquidity dried up throughout the financial system. the bank responded swiftly and supplied extraordinary liquidity, in line with our role as lender of last resort, which i ’ ll discuss later. we launched a broad suite of programs — including some that we used during the global financial crisis and others that we created from scratch. supplying the funding that financial institutions needed we started by addressing the severe, immediate liquidity issues affecting financial institutions in canada