- term liquidity facilities has declined, and the uptake on our provincial and corporate bond - buying programs has been modest. the provincial and corporate bond programs will continue as announced. the bank stands ready to adjust our short - term liquidity facilities as market conditions warrant. well - functioning credit markets and considerable monetary policy stimulus have supported growth through the reopening phase. in fact, we ’ ve seen more household spending — particularly on goods and housing — than we were expecting, largely reflecting the release of pent - up demand. exports are also recovering as foreign demand picks up, although they remain below prepandemic levels. despite this good news, the members of governing council still expect the recuperation phase to be slow and choppy. we don ’ t expect the strong rebound we ’ ve seen to continue at the same pace in the months ahead. business confidence and investment remain subdued. more fundamentally, uncertainty about the future course of the pandemic will continue to restrain the economy, particularly in sectors that involve close contact. and the pandemic itself is accelerating several structural challenges, some of which i mentioned earlier, to which the economy will need to adjust. the governing council also discussed inflation and its outlook. with cpi inflation close to zero, and downward pressure coming from energy prices, travel services and economic slack more generally, we expect inflation to stay well below the - 11 2 percent target in the near term. our core measures of inflation have drifted slightly lower, consistent with the unused capacity in the economy. so, we agreed that as the economy shifts from reopening to recuperation, it will continue to need extraordinary monetary policy support. this is how we can help bring the economy back to its capacity and help get people working again. the governing council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the inflation target is sustainably achieved. to reinforce this commitment and keep interest rates low across the yield curve, the bank is continuing its large - scale asset purchase program at the current pace. this qe program will continue until the recovery is well underway and will be calibrated to provide the monetary policy stimulus needed to support the recovery and achieve the inflation objective. thank you.

then baked this assumption into their decisions and plans. as a result, even as the economy cooled, inflation remained stubbornly high. chart 1 helps us visualize what can happen when inflation expectations aren ’ t held in check. it shows what economists refer to as the phillips curve, which is an economic theory that inflation and unemployment have an inverse relationship in the short run : when one goes up, the other goes down. in the chart, each blue dot shows the data for one month. but, as we can see from the experience of the 1970s, the phillips curve isn ’ t always stable. in chart 1, panel a, the curve shifted. inflation expectations weren ’ t anchored during that decade. declines in demand didn ’ t translate into - 5lower inflation. both unemployment and inflation increased because the phillips curve shifted up and to the right. in panel b, we look at the curve during inflation targeting of 2 %, from 1995 to today. just like the first part of the 1970s, we have seen declining unemployment and rising inflation. but, unlike the 1970s, long - term inflation expectations are currently well anchored at our 2 % target. our job is to use our monetary policy tools to maintain that anchor. this would allow us to gently slide back down the steep portion of the phillips curve and achieve our inflation target without the kind of large increase in the unemployment that we have seen in past recessions. we ’ ve been forceful in our interest rate increases since last march for this very reason — to try to keep inflation expectations anchored. the 1970s taught us — the hard way — that once inflation expectations de - anchor, nothing works well. and the costs of restoring price stability are a lot higher. chart 1 : when inflation expectations are anchored, inflation can fall without a large rise in unemployment core inflation ( % ) a. 1970s high inflation expectations ( late 1970s ) core inflation ( % ) b. 1995 – 2022 inflation - targeting era of 2 % ( well - anchored inflation expectations ) [ grab your reade r ’ s low inflation attent expectations ion ( early 1970s ) with a unemployment unemployment rate ( % ) great rate ( % ) quote monthly data points for core inflation and the unemployment rate. note : each blue dot represents from the transparency docu ment in the economy, it ’ s more important than ever that we with all of this happening or with canadians. communicate openly use the bank started on a path to be more open in our communications with the this beginning