activity. and, unlike the first lockdown in march, we now have a clearer sense of the way forward, thanks to effective vaccines that have arrived sooner than we had anticipated. as these vaccines are distributed, they will save lives and livelihoods. governing council spent a lot of time discussing our expectations for growth once we get past the current surge in the virus. we recognized that, while the arrival of vaccines has reduced uncertainty from exceptional levels, uncertainty remains elevated. in particular, the timing and strength of the economic recovery will depend importantly on the evolution of the virus and the rollout of vaccines. 1 / 2 bis central bankers'speeches based on the current vaccine rollout plans, as we move into the second half of this year and more canadians are vaccinated, we expect to see sustained strength in consumption, with services picking up from very depressed levels. this should support job creation, particularly for workers who have been most affected by the pandemic. and as we move toward broad immunity, we can expect uncertainty about the pandemic to fade and business confidence to improve. this will lead to stronger business investment and exports, consistent with a more broad - based and sustainable recovery. all this will translate into strong economic growth in the second half of this year and first half of 2022. expressed in annual average terms, we project an expansion of 4 percent this year and almost 5 percent in 2022, easing to about 2½ percent in 2023. but even with this strong growth, governing council expects the recovery will be protracted, reflecting how far the economy still has to climb back to reach its full potential. in the mpr projection, economic slack is not fully absorbed until into 2023. let me say a few words about the outlook for inflation. in recent months, cpi inflation has increased to near the bottom of the bank ’ s 1 to 3 percent target range. we now project inflation to return to around 2 percent in the first half of the year, but this is expected to be temporary. the anticipated increase in inflation mainly reflects the effects of the sharp declines in gasoline prices at the onset of the pandemic. as those base - year effects fade, inflation will fall again, pulled down by the significant excess supply in the economy. as the economy absorbs this excess supply, we expect inflation to move up gradually and return sustainably to the 2 percent target in 2023. in sum, there is clear reason to be more optimistic about the direction of the

stephen s poloz : opening statement before the standing senate committee on banking, trade and commerce opening statement by mr stephen s poloz, governor of the bank of canada, to the standing senate committee on banking, trade and commerce, ottawa, ontario, 13 april 2017. * * * good morning, mr. chairman and committee members. senior deputy governor wilkins and i are pleased to be back before you today to discuss the bank ’ s monetary policy report ( mpr ), which we published yesterday. at the time of our last appearance in october, i spoke about the factors that caused us to downgrade our outlook for the canadian economy. six months later, i ’ m pleased to say that i can discuss the factors that have led us to upgrade our forecast. for some time, we have been talking about how the oil price shock that began in 2014 set in motion a complex series of adjustments throughout the economy, including a significant restructuring in the oil and gas sector. what we are seeing now is that energy - related activity has stopped declining and is transitioning to a new level that is commensurate with the current level of oil prices. because that large negative force is now essentially past, it is no longer masking the sources of strength that have been at work for some time, particularly the growth in output and employment that is being driven by the service sector. the expansion over the past six months has exceeded our earlier forecasts, and we have revised up our outlook for average annual growth in 2017 to a bit over 2 1 / 2 per cent, one - half percentage point greater than we projected in the january mpr. we project growth of just under 2 per cent in 2018 and 2019. a crucial question for the bank now is whether the stronger economic data that we have been seeing are signalling increasing momentum. some of the strength is coming from factors that are unlikely to continue at the same pace. for example, the very strong growth in consumption in the first quarter was supported by a temporary boost from the canada child benefit. housing activity has also been stronger than expected. while we have incorporated some of this strength in a higher profile for residential investment, we still anticipate slowing over the projection horizon. the current pace of activity in the greater toronto area ( gta ) and parts of the golden horseshoe region is unlikely to be sustainable, given fundamentals. house price growth in the gta has accelerated sharply in recent months, suggesting that speculative forces are at work. in terms of