and wage growth has reached pre - pandemic levels. businesses can ’ t find enough workers to meet demand and they are telling us they ’ ll need to raise wages to attract and retain staff. we expect strong growth to continue in the months ahead. as remaining public health restrictions ease, canadians are spending more on services — travel and recreation, lodging and restaurants. and we ’ re still buying a lot of goods. housing activity is still strong, and while we expect it to moderate, it will remain elevated. business investment and exports are both picking up, and higher prices for many of the commodities canada exports are bringing more income into the country. robust business investment, improved labour productivity and higher immigration should help 1 / 3 bis central bankers'speeches boost the economy ’ s productive capacity. and higher interest rates will slow spending. 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. that brings me to my second point — the bank ’ s primary focus is inflation. consumer price index ( cpi ) inflation in canada hit a three - decade high of 6. 7 % in march, well above what we projected in the january mpr. the war has driven up the prices of energy and other commodities, and it is further disrupting global supply chains. while most of the factors pushing up inflation come from beyond our borders, with the economy in excess demand, we are facing domestic price pressures too. about two - thirds of cpi components are growing above 3 %, which means canadians are feeling inflation across their household budgets, from gas to groceries to rent. our latest outlook is for 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. high inflation affects everyone. inflation at 5 % for a year — or 3 percentage points above our target — costs the average canadian an additional $ 2000 a year. and it is affecting more vulnerable members of society the most, both because they spend all their income and because prices of essential items like food and energy have risen sharply. this broadening in price pressures is a big concern. it makes it more difficult for canadians to avoid inflation, no matter how patient or prudent they are as shop

pertinent question. what constitutes a " unique " shock? can we expect authorities, if they are granted flexibility, to be sufficiently disciplined not to decide that all shocks are uniquely virulent? everyone always thinks they live in interesting times. financial imbalances certainly are interesting. however, it is not clear that monetary policymakers should be the first line of defence. recent events in a variety of jurisdictions demonstrate the shortcomings of the current system where the degree of financial stability is a by - product, rather than an objective, of regulatory policy. central banks, as guardians of macroeconomic stability, naturally ask whether they should play a role. it does not necessarily follow that that role extends to the conduct of monetary policy. central banks may have the ability to foresee macrofinancial instability. whether they have the appropriate tools to prevent it is another matter. i am most sympathetic to the idea that policy - makers should consider the development of macroprudential regulations to restrain procyclical liquidity creation among financial institutions. the design and scope of such regulation remains to be determined and in many jurisdictions, including canada, there are the added complications of determining where to house this regulatory authority and how to coordinate it with other regulators. 4 if the regulatory framework is appropriately designed, could it be reinforced by monetary policy? professor issing provides one answer. he argues that the ecb's monetary pillar can act as a signal for flexibility, perhaps in the monetary policy horizon, in the presence of excess credit creation. michael woodford agrees that money and credit can have a useful role, but cautions against incorporating them in the monetary policy reaction function. 5 do those situations that arise from the globalization process create a case for additional policy flexibility? there are some practical difficulties such as the conflicting implications globalization may have for consumer - price inflation. for example, its impact on manufactured goods prices argues for a lower target ; its impact on commodity prices for a higher one. 6 moreover, these conflicting forces are basically price - level effects, though ones that could go on for some time. similarly, the current international monetary order argues for tighter policy due to artificially low long - term interest rates and for looser policy in countries that have seen excessive exchange rate appreciation. further complicating matters is the fact that the globalization process is neither monotonic nor relentless. its impacts will wax and wane over time, raising the question of how frequently policy parameters might be adjusted in the face of