. and so, canadians'expectations for inflation have become firmly anchored around 2 per cent. this climate of low, stable, and predictable inflation has helped to smooth out the ups and downs in the economy and to create the best possible environment for longer - term economic growth in canada. inflation and the economic outlook let me now give you the bank of canada's views on the state of the canadian economy and the outlook. first, a bit of history. following the 11 september 2001 terrorist attacks in the united states, the bank of canada, like other major central banks, moved quickly and aggressively to cut its policy interest rate to shore up confidence. that dramatic monetary policy action helped a great deal. by the spring of 2002, it became evident that our economy hadn't been knocked off track by the events of 11 september. indeed, evidence was starting to build that the economy was growing faster than its production potential, taking up the remaining small amount of economic slack. so, we raised our key policy rate three times between april and july, by a total of three - quarters of a percentage point. but by late last summer, we were seeing the effects of financial headwinds, geopolitical uncertainties, and continued weakness in the global economy. these factors remained in play through the autumn. as a result, we refrained from raising interest rates, even though inflation was accelerating. our initial analysis was that this increase in inflation would be temporary. however, both core and total cpi inflation remain well above target. this reflects the impact of higher - than - expected prices for crude oil and natural gas, continuing increases in auto insurance premiums, and price pressures in certain sectors, such as housing, food, and some services. the higher inflation also suggests an underlying firmness in the price - setting environment. in other words, relative price increases wouldn't be pushing up trend inflation if there was not sufficient demand. indeed, final domestic demand - especially household spending - has remained robust. however, economic growth in canada moderated in the final three months of 2002, largely because of weaker exports - most notably, a decline in automotive shipments to the united states. even with this slowing growth in the fourth quarter, upward revisions for previous quarters leave the level of economic activity slightly higher than we had been monitoring. in fact, canada's economy remains near full capacity. let me list some of the indicators that support this view : high industrial capacity utilization ; near record - high labour force participation rates

tiff macklem : opening statement before the house of commons standing committee on finance opening statement by mr tiff macklem, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 18 april 2023. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report ( mpr ). last week, we maintained the policy rate at 4a½ % as we continue to assess whether monetary policy is restrictive enough to return inflation to our 2 % target. since the last time we were here with you, we've seen a steady improvement in inflation and modest economic growth. inflation is coming down quickly - data this morning show it fell to 4. 3 % in march. and we forecast it to be around 3 % this summer. we are encouraged by that, but we are also seized with the importance of staying the course and restoring price stability for canadians. several things still have to happen to get inflation all the way back to the 2 % target. inflation expectations have to come down further, services price inflation and wage growth need to moderate, and corporate pricing behaviour has to normalize. we are focused on these indicators, and the evolution of core inflation, to ensure that consumer price index ( cpi ) inflation continues to progress toward the target. if monetary policy is not restrictive enough to get us all the way back to the 2 % target, we are prepared to raise the policy rate further to get there. before i take your questions, let me give you some economic and financial context for the decision. the canadian economy remains in excess demand. gross domestic product ( gdp ) growth in the first quarter of the year appears stronger than we projected in january, and the labour market is still tight. the unemployment rate, at 5 %, remains near its record low, and wages continue to grow in the 4 % to 5 % range. employment growth has been surprisingly strong, reflecting continued demand and increases in labour supply. past policy rate increases are working their way through the economy and restraining demand. households are slowing their spending, particularly on big - ticket items. as mortgages are renewed at higher rates, more households will feel the restraining effects of monetary policy. taking these forces into consideration, we expect canadian gdp growth to be weak for the rest of this year before beginning to pick up gradually in 2024 and through 2025. what does all