productive capacity should be helped by robust business investment, improved labour productivity and higher immigration. putting this all together, the bank forecasts the canadian economy will grow 4¼ % this year, before moderating to 3¼ % in 2023 and 2¼ % in 2024. the bank ’ s primary focus is inflation. we are acutely aware that already - high inflation has risen further above our target. the invasion of ukraine has driven up the prices of energy and other commodities, and the war is further disrupting global supply chains. we are also concerned about the broadening of price pressures in canada. with about two - thirds of consumer price index ( cpi ) components growing above 3 %, canadians are feeling inflation across their household budgets, from gas to groceries to rent. 1 / 3 bis central bankers'speeches cpi inflation in canada hit a three - decade high of 5. 7 % in february, above what we projected in the january mpr. we now expect inflation to average almost 6 % in the first half of 2022 and remain well above our 1 % to 3 % control range throughout this year. we then expect it to ease to about 2½ % in the second half of 2023 before returning to the 2 % target in 2024. with inflation broadening and remaining higher for longer, the risk is that canadians start to think that high inflation will become entrenched. this brings me to my third point — interest rates are increasing. raising the policy rate is the main tool the bank has to moderate demand, prevent a persistent buildup in domestic price pressures and keep inflation expectations moored on the 2 % target. the economy can handle higher interest rates, and they are needed. increases in the bank ’ s policy rate raise the interest rates that banks and other lenders charge their customers. these include the rates on business loans, consumer loans and mortgage loans. with increases in the policy rate, interest paid on savings products will move up as well. by making borrowing more expensive and increasing the return on saving, a higher policy interest rate dampens spending, reducing overall demand in the economy. and with demand starting to run ahead of the economy ’ s supply capacity, we need that to happen to bring the economy into balance and cool domestic inflation. we also need higher interest rates to keep canadians ’ expectations of inflation anchored on the target, so that as global inflationary pressures from higher oil prices and clogged supply chains abate, inflation in canada falls back toward the target

economy. what does this mean? in part, it means ensuring that our school system does a better job of bringing students to a level of “ functional literacy, ” and i will have more to say about this in a moment. but it also means ensuring that children have an opportunity to really understand how the economy works. based on my experience in russia, it is not that the russians that i worked with had not studied the theory of the market economy at university, but that they did not have the opportunity to experience at an early age how a market economy works, and to learn from that experience. dodge, d. 2003. “ human capital, early childhood development, and economic growth : an economist ’ s perspective. ” the great advantage that we in canada have is that most of us do understand intuitively how the market system works. that ’ s because we have had exposure to it while growing up, in one of two ways : as mini - entrepreneurs, delivering newspapers, cutting grass, or babysitting ; or as young employees, working at a fast - food joint, or packing and carrying out groceries at a supermarket. as mini - entrepreneurs, we learned that, if we delivered a wet newspaper, we wouldn ’ t get paid. if we didn ’ t show up on time for babysitting, we wouldn ’ t be called again. as young employees, we learned that, if we flipped the hamburger onto the floor, or if were rude to the customer, we would get fired. importantly, we also learned that there is a relationship between the quality of our service and remuneration. today, some of these “ early commerce ” experiences and learning opportunities for children are gone. for example, the morning paper is now delivered by adults who can get up at 3 a. m. and, in the interests of health and occupational safety, some canadian provinces have labour laws that prevent anyone under 16 years of age from even being on a construction site. because some of these “ early commerce ” experiences are gone, and because more are likely to disappear as technology changes, all of us, as parents, employers, and public policy - makers will have to keep thinking of ways to provide new opportunities for our youth to learn by doing. as parents, we can encourage our children to seek out “ early - commerce ” experiences. as employers, we can offer opportunities to teenagers, as interns or part - time workers. as educators, we can do more to integrate work experiences with