grow by 2. 2 per cent in 2012. going forward, we expect growth of 2. 3 per cent in 2013 and 2. 4 per cent in 2014. • core inflation has been lower than expected in recent months. this reflects somewhat softer prices across a wide range of goods and services. core inflation is expected to increase gradually over coming quarters, reaching 2 per cent by the middle of 2013 as the economy gradually absorbs the current small degree of slack, bis central bankers ’ speeches the growth of labour compensation remains moderate and inflation expectations stay well - anchored. • total cpi inflation has fallen noticeably below the 2 per cent target, as expected. it is projected to return to target by the end of 2013, somewhat later than previously anticipated. • the inflation outlook in canada is subject to significant risks. the bank ’ s projection assumes that authorities in europe are able to contain the ongoing crisis, and that the u. s. fiscal cliff will be avoided. – the three main upside risks relate to the possibility of higher global inflationary pressures, stronger canadian exports and renewed momentum in canadian residential investment. – the three main downside risks relate to the european crisis, weaker demand for canadian exports and the possibility that growth in canadian household spending could be weaker. • overall, the bank judges that the risks to canada ’ s inflation outlook are roughly balanced over the projection period. • reflecting all of these factors, the bank yesterday maintained the target for the overnight rate at 1 per cent. over time, some modest withdrawal of monetary policy stimulus will likely be required, consistent with achieving the 2 per cent inflation target. the timing and degree of any such withdrawal will be weighed carefully against global and domestic developments, including the evolution of imbalances in the household sector. with that, tiff and i would be pleased to take your questions. bis central bankers ’ speeches

. but with an appropriate reduction in the amount of monetary stimulus, we see the level of output remaining close to capacity during this year and into 2004. so, in making our interest rate decision on 4 march, we weighed the following considerations : domestic inflation pressures ; the expectation that canadian economic activity will remain near potential in 2003 despite geopolitical uncertainties ; the stimulative stance of monetary policy ; and improved conditions in capital markets. taking all of these factors into account, the bank raised its key policy rate by one - quarter of a percentage point to 3 per cent. even with this increase, the stance of monetary policy remains stimulative. thus, over time, further reductions in monetary stimulus will be required to return inflation to the target over the medium term. but, as we have said, the timing and pace of increases in policy interest rates will continue to depend on a number of considerations. these include the strength of demand pressures ; the evolution of inflation expectations ; the impact on confidence of geopolitical and global economic uncertainties ; and the way in which developments in the middle east affect demand and inflation, both globally and in canada. the bank will continue to closely monitor all of these factors. * * * so, to conclude, these are certainly challenging economic times. but we in canada remain convinced of the merits of the economic policy consensus reached at the oecd. to reiterate, these policies are : a monetary policy aimed at medium - term price stability ; a fiscal policy aimed at reducing public debt - to - gdp ratios ; trade liberalization ; and meaningful structural reform. canada's positive economic experience over the past couple of years, in the face of stressful times for the global economy, is strong evidence that this framework is the right one. in canada, there is a determination to stick with these policies which, especially during these uncertain times, are demonstrating their value.