and rising political tensions in the middle east have driven up the world price of oil that canada imports. at the same time, shale - oil development in the united states, together with other factors, has led to ample supply at cushing, oklahoma, where the north american price for west texas intermediate ( wti ) is set. the canadian price for western canada select ( wcs ) has been driven down further by outages in some pipelines and refineries equipped to handle canadian oil. underlying these divergences is a basic fact : the transport system determines bis central bankers ’ speeches the ability of canadian producers to move goods such as oil to those markets where it commands a higher price, and thus to benefit from participating in a global market. the various aspects of the macroeconomic outlook i have been describing come together in the outlook for inflation. because there is less slack in the economy and gasoline prices are also higher, the profile for inflation is expected to be somewhat firmer than anticipated by the bank in january. both overall inflation and underlying inflation are expected to remain close to 2 per cent through to the end of 2014 ( chart 9 ). bis central bankers ’ speeches reflecting all of these factors, the bank has decided to maintain the target for the overnight rate at 1 per cent. in light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. the timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments. opportunities for transport and logistics i would now like to touch on the longer - term trends in the global economy and what they mean for your industries. in 1902, charles melville hays saw opportunity in the waves of immigrants pouring into the west. prairie agriculture was expanding rapidly. mining and forestry camps were springing up in the north. the rate of growth was fast and it was clear that success depended on moving people and goods across this vast land quickly and efficiently. today, we can look across the pacific ocean where asia is urbanizing at a breakneck pace. china and india are housing the equivalent of the entire population of canada every 18 months. a massive middle class is being formed, growing by 70 million people each year – people who represent a rapidly - rising share of global demand for all types of goods. by shifting trade from slow - growing economies to fast - growing ones, canada can participate more fully

canada ’ s april 2012 monetary policy report. bis central bankers ’ speeches in addition, growth is expected to continue in the period ahead – at 2. 4 per cent in 2012 and 2013, easing to 2. 2 per cent in 2014. these growth rates may seem relatively modest, but over the 2012 to 2013 period, they are somewhat above the rate at which the potential of the economy is expanding, estimated at 2 per cent in 2012 and 2. 1 per cent in 2013. as a result, we expect the canadian economy to return to full capacity by early next year ( chart 6 ). bis central bankers ’ speeches most of the growth in the period ahead is expected to come from private domestic demand. in particular, that growth relies on continued spending by canadian households on consumption and housing. it also reflects a continued strong rise in investment spending as canadian firms seek to expand, replace, and modernize their capacity. on the other hand, we are still seeing weak growth in canada ’ s net exports. that in turn reflects factors i mentioned earlier : notably the protracted recovery of demand in the united states, canada ’ s major trading partner, and canada ’ s weak competitiveness. the bank forecasts that canada ’ s exports will regain their pre - recession peak only at the end of 2013. in contrast, the level of imports has already regained its pre - recession peak. this divergence has contributed to a decline in canada ’ s current account balance, which has dropped from a pre - recession surplus to a deficit of approximately 2 per cent of gdp – a trend that is projected to persist ( chart 7 ). oil prices are one important factor underlying the economic outlook for canada – and here is a story in which transport has been playing an important role. canada as a whole usually benefits when oil prices rise. as a net oil exporter, canada gains from higher incomes in the industry, higher production and investment and the resulting spillovers to other parts of the economy. those benefits typically outweigh the effects of more expensive gasoline on the cost of living and the effects on production costs. in recent months, this balance of costs and benefits has shifted because of an unprecedented spread between the price of oil that canada imports and the price of oil that canada exports – a spread that peaked at about $ 50 a barrel earlier this year ( chart 8 ). there are many reasons for this, some of which are temporary. growing global demand – especially from emerging - market economies – together with supply disruptions