and production costs. as a result, inflation is coming down quickly. we expect it will hit 3 % this summer, even as the economy continues to grow modestly. we are encouraged by this progress, but we expect that getting inflation from 3 % back to the 2 % target is going to be more difficult. our current projection has that happening only by the end of 2024. 1 / 5 bis - central bankers'speeches in this context, i want to be clear : our job is not done until we restore price stability - in other words, until inflation is centred on our 2 % target. price stability is important because it is a key ingredient to a prosperous economy. low and stable inflation strengthens the competitive forces in the economy and allows canadians to plan and invest with confidence that their money will hold its value. as we outlined in april, the biggest upside risk to our inflation forecast is that services price inflation could be more persistent than we expect. for services price inflation to slow enough for overall inflation to get back to the 2 % target, several things still need to happen : the labour market needs to rebalance, corporate pricing behaviour needs to normalize, and near - term inflation expectations need to come down further. let me take each of these in turn. labour market the canadian labour market is still tight. the unemployment rate, at 5 %, remains near a record low, and employment growth in recent months has been stronger than expected. but labour supply has also been growing faster than anticipated as more women and immigrants join the workforce. increases in child care subsidies and more flexible work arrangements are improving the labour force participation of women, particularly mothers with young children. more people coming to canada are also augmenting the labour force. the canadian population hit 39. 6 million in january, after a record gain of one million newcomers in 2022. these newcomers include permanent residents, temporary foreign workers and international students. they are adding to demand in the economy, and many are new workers increasing labour supply. the increased labour supply is helping ease pressures in the labour market by filling job vacancies. and we are seeing some evidence that labour shortages are beginning to wane. results from the business outlook survey ( bos ) for the first quarter of 2023 show that firms were beginning to find it easier to hire workers. but the strong demand for labour is still quickly absorbing the increased supply, and wage growth has yet to moderate. most wage growth measures remain around the 4 % to 5

tiff macklem : staying the course to price stability remarks by mr tiff macklem, governor of the bank of canada, at the toronto region board of trade, toronto, ontario, 4 may 2023. * * * introduction good afternoon. i want to thank the toronto region board of trade for inviting me to speak today. i can't think of a better audience to speak with about price and financial stability, and i very much look forward to our discussion. the bank of canada began raising interest rates in march of last year, and 14 months later we can see that monetary policy is working to bring inflation down. in march of this year, consumer price index ( cpi ) inflation was 4. 3 % - or roughly half of what it was last summer when it peaked at just over 8 %. we expect inflation to decline further to about 3 % this summer. this is good news. but i'm not here to talk to you about the journey from 8 % to 4 % or even 3 %. i'm here to talk about staying the course to price stability and getting the rest of the way back to the 2 % target. monetary policy still has work to do. i want to talk to you about the challenges and risks in the journey back to target. i also want to discuss the recent stress we've seen in the global banking sector and how financial stability and price stability reinforce each other. restoring price stability early in the covid - 19 pandemic, inflation in canada was sparked by global forces, including supply chain disruptions and a spike in global demand for goods. russia's invasion of ukraine last year drove inflation even higher, particularly for energy and agricultural commodities. but domestic forces have increasingly contributed to inflationary pressures. the canadian economy began overheating as the economy fully reopened. people still wanted to buy goods, and demand for services soared as households tried to catch up on the many services they had missed out on through the pandemic. employers could not find enough workers to keep up, and businesses were quick to pass on increased costs to consumers. the bank responded forcefully to these inflationary pressures, raising our policy interest rate quickly. we did this to rebalance the economy - to lower demand and give supply a chance to catch up. this tighter monetary policy is working. demand for goods is slowing because higher interest rates are restraining household spending. and the supply of goods is improving as global bottlenecks ease and lower energy prices reduce shipping