to guide our policy decisions. 1 / 2 bis - central bankers'speeches cpi inflation has been about 2 % since the summer, and we expect it to be close to target, on average, over the next couple of years. we thought elevated shelter price inflation would continue to ease, and it has. and the downward pressure on inflation from goods prices has also moderated as predicted. we expect the gst holiday to temporarily lower inflation to around 1½ % in january, but that effect will be unwound after the gst break ends in mid - february. we will be looking at measures of core inflation to help us assess the trend in cpi inflation. while the upward and downward pressures on prices have been moderating, risks to the inflation outlook remain. elevated wage increases combined with weak productivity could push inflation up. or the economy could keep growing below its potential, which would pull inflation down. in addition, the economic outlook is clouded by the possibility of new tariffs on canadian exports to the united states. no one knows how this will play out in the months ahead - whether tariffs will be imposed, whether exemptions get agreed, or whether retaliatory measures will be put in place. this is a major new uncertainty. to summarize, inflation is back to the 2 % target and lower interest rates are beginning to pass through to stronger spending by households. but the economy remains in excess supply and the growth outlook now appears softer than we projected in october. with inflation back to target, we have cut the policy rate by 50 basis points at each of the last two decisions because monetary policy no longer needs to be clearly in restrictive territory. we want to see growth pick up to absorb the unused capacity in the economy and keep inflation close to 2 %. the governing council has reduced the policy rate substantially since june, and those cuts will be working their way through the economy. going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time. in other words, with the policy rate now substantially lower, we anticipate a more gradual approach to monetary policy if the economy evolves broadly as expected. our decisions will be guided by incoming information and our assessment of the implications for the inflation outlook. the bank is committed to maintaining price stability for canadians by keeping inflation close to the 2 % target. with that, the senior deputy governor and i would be pleased to take your questions. 2 / 2 bis - central bankers'speeches

tiff macklem : opening statement before the house of commons standing committee on finance opening statement by mr tiff macklem, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 18 april 2023. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report ( mpr ). last week, we maintained the policy rate at 4a½ % as we continue to assess whether monetary policy is restrictive enough to return inflation to our 2 % target. since the last time we were here with you, we've seen a steady improvement in inflation and modest economic growth. inflation is coming down quickly - data this morning show it fell to 4. 3 % in march. and we forecast it to be around 3 % this summer. we are encouraged by that, but we are also seized with the importance of staying the course and restoring price stability for canadians. several things still have to happen to get inflation all the way back to the 2 % target. inflation expectations have to come down further, services price inflation and wage growth need to moderate, and corporate pricing behaviour has to normalize. we are focused on these indicators, and the evolution of core inflation, to ensure that consumer price index ( cpi ) inflation continues to progress toward the target. if monetary policy is not restrictive enough to get us all the way back to the 2 % target, we are prepared to raise the policy rate further to get there. before i take your questions, let me give you some economic and financial context for the decision. the canadian economy remains in excess demand. gross domestic product ( gdp ) growth in the first quarter of the year appears stronger than we projected in january, and the labour market is still tight. the unemployment rate, at 5 %, remains near its record low, and wages continue to grow in the 4 % to 5 % range. employment growth has been surprisingly strong, reflecting continued demand and increases in labour supply. past policy rate increases are working their way through the economy and restraining demand. households are slowing their spending, particularly on big - ticket items. as mortgages are renewed at higher rates, more households will feel the restraining effects of monetary policy. taking these forces into consideration, we expect canadian gdp growth to be weak for the rest of this year before beginning to pick up gradually in 2024 and through 2025. what does all