recovery and abundant employment opportunities have meant that new entrants are better positioned to find jobs that match their qualifications. that ’ s helped many young people start their careers on firm footing, which is good news for them and for our economy. managing expectations to tame inflation while the previous two topics come with the benefit of hindsight, my final topic is something we ’ re still squarely in the middle of — the ongoing battle to bring inflation back to our 2 % target. giuliano and a. spilimbergo, “ growing up in a recession, ” review of economic studies 81, no. 2 ( april 2014 ) : 787 – 817 ; and j. g. altonji, l. b. kahn and j. d. speer, “ cashier or consultant? entry labor market conditions, field of study, and career success, ” journal of labor economics 34, no. s1 ( january 2016 ) : s361 – s401. 6 see p. - 8since we introduced inflation targeting in 1991, the bank has been largely successful at keeping inflation low, stable and predictable. because of this, canadians had grown to expect that this would remain the case. so they generally behaved accordingly, making saving and spending decisions and salary demands based on inflation running around 2 %. today, that record is being seriously tested as we emerge from the first global pandemic in a century and face the effects of russia ’ s unprovoked invasion of ukraine. both factors are contributing to inflation levels well above our target while also raising short - and medium - term inflation expectations as seen in chart 3. monetary policy is actively tightening to cool the economy and contain these pressures. chart 3 : the inflation and wage growth expectations of households and firms have increased quarterly data a. households ( csce ) % b. firms ( bos and blp ) % inflation expectations : 1 - year - ahead inflation expectations : 2 - year - ahead inflation expectations : 5 - year - ahead wage growth expectations : 1 - year - ahead inflation expectations : 2 - year estimate ( bos ) wage growth expectations : 1 - year estimate ( bos ) inflation expectations : 1 - year ( blp ) inflation expectations : 2 - year ( blp ) inflation expectations : 5 - year ( blp ) note : csce is the canadian survey of consumer expectations, bos is the business outlook survey, and blp is the business leaders'pulse survey. source :

households have had some income growth during these past five years, and these households may have grown accustomed to higher income levels. they may face an adjustment as their debt - service ratio rises once again, with consequences for their consumption spending. of course, this issue is most important for highly indebted households. we also know that the jump in payments will be greatest for those who took out mortgages when interest rates were at their lowest levels, in 2015 and 2016, so the mortgage renewal process is likely to weigh on the economy more in 2020 and 2021. all that being said, governing council concluded that the economy should be resilient to higher interest rates, provided that labour income continues to grow. the biggest issue on the table was trade tensions. as discussed before, uncertainty around the future of the north american free trade agreement has caused some companies to delay investment spending or to move their investments to the united states. this channel was identified and captured in our projection some time ago. the recent imposition by the us government of actual tariffs on canadian exports has made the situation more concrete. in the projections we are presenting today, we have added more negative judgment to our business investment forecast in recognition of this. we have also incorporated the effects of the us tariffs on steel and aluminum, and the various countermeasures implemented around the world. box 2 1 / 2 bis central bankers'speeches in the mpr gives a flavour of the complex effects such actions will have on the economy. let me summarize briefly. a us company importing canadian steel must now pay a 25 per cent tariff. they may instead buy steel made in the united states or in some other country. or, if no obvious substitutes are available, they may just pay the higher price. or, the canadian company may offer to reduce its price in order to absorb some of the tariff ’ s impact. or, it may look to other markets to sell its products. the response of companies will depend on how long they think the tariffs might be in place — for example, it appears that if nafta is successfully renegotiated, those tariffs would no longer be in effect. the point is, the outcome depends on individual reactions, which depend on the circumstances. and then there are countermeasures. canada has imposed a 25 per cent tariff on steel imported from the united states. this would seem to level the playing field, but many of the same complexities enter the analysis. all things considered, our