commodity prices. in canada, the economy remains overheated and clearly in excess demand. tight labour markets have shown only modest signs of easing. job vacancies have come down a little but remain elevated, the unemployment rate is near historic lows, and many businesses continue to report labour shortages. 2 / 3 bis - central bankers'speeches but, as i said, higher interest rates are working to help the economy rebalance. household spending has moderated. demand for furniture and appliances has decreased, and housing market activity and prices have declined substantially. as pentup demand diminishes, spending on services should ease. higher rates are also expected to continue to slow business investment, and weaker foreign demand will weigh on exports. putting this together, we expect growth in canada to stall through the middle of this year before picking up later in the year. we project that, on an annual average basis, growth in canada's gross domestic product will slow from about 3½ % in 2022 to about 1 % in 2023 and 2 % in 2024. lower energy prices, improved global supply chains and slowing demand should bring inflation down significantly this year. we expect cpi inflation to fall to around 3 % in the middle of this year and reach the 2 % target in 2024. needless to say, there are risks around this projection. the biggest near - term risk is that global energy prices could increase, pushing inflation up globally. we're also concerned that if inflation expectations remain elevated in canada or increases in labour costs persist, inflation will not come down as quickly as we have forecast. overall, we view the risks around our inflation forecast as balanced, but with inflation still well above our target, we continue to be more concerned about the upside risks. if these upside risks materialize, we are prepared to raise interest rates further. i want to leave you with a few key messages. the decline in inflation since the summer is welcome relief for the many canadians who are struggling to keep up with the rising cost of living. but at more than 6 %, inflation remains too high. to combat inflation, the bank of canada responded forcefully, raising its policy interest rate from 0. 25 % a year ago to 4. 50 % today. it's working. we are turning the corner on inflation. we're still a long way from our target, but recent developments have reinforced our confidence that inflation is coming down. and we are committed to getting inflation all the way

by more than the bank had expected, with more muted price pressures across a wide range of goods and services, consistent with the unexpected increase in excess capacity. bis central bankers ’ speeches • total cpi inflation has also been lower than anticipated, reflecting developments in core inflation and weaker - than - projected gasoline prices. • total cpi inflation is expected to remain around 1 per cent in the near term. it is expected to rise gradually, along with core inflation, to the 2 per cent target in the second half of 2014 as the economy returns to full capacity and inflation expectations remain well - anchored. • despite the reduction in global tail risks as a result of a series of actions by european and american authorities, the inflation outlook in canada is still subject to significant risks. • the three main upside risks to inflation in canada relate to the possibility of stronger - than - expected growth in the u. s. economy, higher canadian exports and renewed momentum in canadian residential investment. • the three main downside risks to inflation in canada relate to the european crisis, more protracted weakness in business investment and exports in canada, and the possibility that growth in canadian household spending could be weaker. • overall, the bank judges that the risks to the inflation outlook in canada are roughly balanced over the projection period. • reflecting all of these factors, the bank, on 23 january, maintained the target for the overnight rate at 1 per cent. • while some modest withdrawal of monetary policy stimulus will likely be required over time, consistent with achieving the 2 per cent inflation target, the more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest that the timing of any such withdrawal is less imminent than previously anticipated. with that, tiff and i would be pleased to take your questions. bis central bankers ’ speeches