to be slightly weaker, reflecting more subdued u. s. activity. bis central bankers ’ speeches overall, the bank projects the economy will expand by 2. 8 per cent in 2011, 2. 6 per cent in 2012, and 2. 1 per cent in 2013, returning to capacity in the middle of 2012. in the near term, total cpi inflation is expected to remain above 3 per cent, largely reflecting temporary factors such as significantly higher food and energy prices. it is expected to return to the 2 per cent target by the middle of 2012 as the temporary factors unwind, excess supply in the economy is gradually absorbed, labour compensation growth stays modest, productivity recovers, and inflation expectations remain well - anchored. core inflation is slightly firmer than anticipated, owing to temporary factors and to more persistent strength in the prices of some services. core inflation is now expected to remain around 2 per cent over the projection horizon. although the global outlook remains broadly unchanged, global risks have intensified, most notably in europe. the three main upside risks to inflation in canada relate to the possibility of higher - than - projected commodity prices and global inflation, stronger momentum in canadian household spending, and the possibility that there is less excess capacity in the canadian economy. the three main downside risks to inflation in canada relate to sovereign debt concerns in europe, headwinds from the persistent strength of the canadian dollar, and the possibility that growth in canadian household spending could be weaker than projected. overall, the bank judges that the risks to the inflation outlook in canada are roughly balanced over the projection horizon. reflecting all of these factors, the bank yesterday maintained the target for the overnight rate at 1 per cent. to the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2 per cent inflation target. such reduction would need to be carefully considered. with that, tiff and i would be pleased to take your questions. bis central bankers ’ speeches

tiff macklem : monetary policy decision opening statement by mr tiff macklem, governor of the bank of canada and ms carolyn rogers, senior deputy governor of the bank of canada, at the press conference following the monetary policy decision, ottawa, ontario, 11 december 2024. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our policy decision. today, we lowered the policy interest rates by 50 basis points. this is our fifth consecutive decrease since june and brings our policy rate to 3¼ %. monetary policy has worked to bring inflation back to the 2 % target. our policy focus now is to keep inflation close to target. let me outline what we're seeing in the economy, and how that played into our decision. in the united states, the economy continues to show broad - based strength and inflation has been holding steady. the us dollar has appreciated against most other currencies, including the canadian dollar. canada's economy grew by 1 % in the third quarter, which was slower than we expected. recent data also suggest growth will be lower than projected in the final quarter of this year. growth in the third quarter was pulled down by business investment, inventories and exports. but consumer spending and housing activity both picked up, as lower interest rates started to boost household spending. canada's job market is still softening. businesses have continued hiring, but the number of people looking for work has been increasing faster than the number of jobs. the unemployment rate rose to 6. 8 % in november. it has been especially hard for young people and newcomers to canada to find work. a number of policy measures have been announced that will affect the outlook for growth and inflation in the months ahead. the most significant of these is reduced immigration targets, which suggest gdp growth next year will be lower than we forecast in october. the effects of lower population growth on the inflation outlook will likely be more muted because reduced immigration dampens both demand and supply in the economy. we'll have more to say on this when we release our next forecast in january. other federal and provincial government policies - including a temporary gst break on some consumer products, one - time payments to individuals, and changes to mortgage rules - will likely affect the dynamics of household spending and inflation in the months ahead. again, we will have more to say on this in january. as always, we will look through effects that are temporary and focus on underlying trends