were eroded by rising prices. speculation was rampant. and the economic booms that led to rising inflation ended up in recessions. one of the things we learned from this bitter experience is that high inflation injects additional uncertainty into decision making. in a market economy, prices contain valuable information. when the price of a product is rising relative to other products, it's a signal that that particular product is becoming scarcer. producers are then encouraged to increase its supply, while consumers are encouraged to economize on its use, thus alleviating the scarcity. conversely, a drop in the price of a product is a signal that it is becoming more abundant. when this happens, firms are led to reduce their supplies of the product, and consumers are encouraged to increase their demand for it. but when inflation is high and variable, buyers and sellers are never quite sure what a price increase means. is it a sign that a specific good is becoming scarcer, or is it just a sign of more widespread inflation? this uncertainty means that prices no longer convey as much useful information, and, as a result, people find it difficult to make sound decisions about production and investment. they focus on trying to protect themselves against the effects of inflation. investors won't commit their resources for lengthy periods ; labour negotiations become more acrimonious ; and the overall economy is not as productive as it could be. indeed, with the erosion of confidence in money comes an erosion of confidence in the fairness of markets. as former bank of canada governor gerald bouey aptly put it in his 1981 annual report, " inflation melts the glue that holds free societies together. " the lesson we ( and other central banks ) have learned in the past 30 years is that low and stable inflation is the best contribution that monetary policy can make to a strong economy. since 1991, the bank of canada has conducted monetary policy with an explicit numeric target for inflation, a target that is set jointly with the government of canada. since 1995, the inflation target has been the 2 per cent midpoint of a 1 to 3 per cent range. it was last renewed 5 years ago, and is coming up for renewal this year. having a clear objective has increased the bank of canada's accountability to canadians. it has made it easier for the bank to explain its actions and easier for people to judge how the bank is doing in meeting its objective. once canadians believed that the bank would take action to

target will be slow, and risks remain. overall, our outlook for both growth and inflation is largely unchanged from when we were here in october. economic growth is expected to be modest in 2024 - weak in the first half before picking up around the middle of the year and rising to about 2½ % in 2025. with downward and upward forces largely offsetting in the near term, cpi inflation is expected to remain close to 3 % over the first half of this year. it is then expected to ease to about 2½ % by year end and return to target in 2025. let me give you a sense of governing council's monetary policy deliberations. at our decision last week, there was a clear consensus to maintain our policy rate at 5 %. we also discussed where we see the economy and inflation going and what that could mean for monetary policy going forward. what came through in the deliberations is that governing council's discussion about future policy is shifting from whether monetary policy is restrictive enough to how long to maintain the current restrictive stance. that doesn't mean we have ruled out further policy rate increases. if new developments push inflation higher, we may still need to raise rates. but what it does mean is that if the economy evolves broadly in line with the projection we published last week, i expect future discussions will be about how long we maintain the policy rate at 5 %. governing council is concerned about the persistence of underlying inflation. we want to see inflationary pressures continue to ease and clear downward momentum in underlying inflation. we also discussed the risks to the economy and inflation. we are trying to balance the risks of over - and under - tightening. we don't want to cool the economy more than necessary. but we don't want canadians to have to continue to live with elevated inflation either. we remain focused on a number of indicators of underlying inflationary pressures. we need to see further and sustained easing of core inflation. with the economy now looking to be in modest excess supply, demand pressures have abated. corporate pricing behaviour has continued to normalize. at the same time, measures of near - term inflation expectations and wage growth suggest that underlying inflationary pressures remain. let me conclude. we've come a long way from the inflation peak in 2022. monetary policy is working, and we need to continue to let it work. we remain resolute in our commitment to return inflation to the 2 % target. with that summary