that are affecting some canadian farmers directly. on top of this, we see the potential for more friction between the united states and european union. a big part of the bank ’ s work leading up to the next mpr in july will be to understand the implications of all these developments. - 8of course, the trade disputes are not just a short - term concern. there are also longer - term implications for the global and canadian economies. if some of these disputes were to be resolved, that would provide a welcome boost to the canadian and global economies. but if the disputes were to worsen and become long lasting, the outlook would be quite different. not only would we see weaker economic demand, but the supply side of the economy would also take a hit as companies deal with disruptions to their supply chains. obviously, this remains a major preoccupation for us. governing council also spent some time talking about prices in financial markets. since the start of the year, financial conditions have become more accommodative in many economies, and this will help support economic growth. we talked about the signals that we should take from a very flat or, in some cases, inverted yield curve. these developments partly reflect a change in tone by many central banks and, possibly, investor appetite for long - term, fixedincome assets. they nonetheless also reflect a concern about the prospects for growth that is not reflected across other asset classes. we continue to be attentive to these signals. let ’ s not forget that we ’ re a central bank that targets inflation. on that front, inflation remains near 2 per cent. some temporary factors are boosting inflation and offsetting the modest downward pressure that is being generated by excess supply in the economy. we project that these upward and downward pressures will dissipate over the projection horizon, leaving inflation close to target. putting it all together, recent data have reinforced governing council ’ s view that the slowdown in late 2018 and early 2019 was temporary. at the same time, global trade risks have increased. in this context, the degree of accommodation being provided by the current policy interest rate remains appropriate. in taking future policy decisions, governing council will remain data dependent and especially attentive to developments in household spending, oil markets and the global trade environment.

our job, the bank of canada needs to understand how these factors affect investment decisions. a vibrant business sector, after all, is essential to a healthy labour market and to our economic prospects. further details about yesterday ’ s decision the outlook for investment was only one of many factors that went into our interest rate announcement yesterday. as i said, there have been some encouraging signs that investment outside the energy sector has firmed up. let me take you through the other main points of our discussion. naturally, governing council spent time talking about whether the economy was progressing as we had forecast in our april mpr. as a reminder, we projected that the economy would expand at an annual pace of just 0. 3 per cent in the first quarter of the year. we also projected growth would rebound modestly to a 1. 3 per cent pace in the second quarter and further accelerate later in the year. evidence has been accumulating that tells us our story is on track. we hope to see this confirmed in the national accounts data that statistics canada will release tomorrow. we ’ ve worked hard to understand some conflicting signals in the economic data. the labour market has been strong, with solid growth in jobs and steady growth in wages. we ’ ve tried to square this strength with the weakness seen in the 10 see r. barnett and r. mendes, “ a structural interpretation of the recent weakness in business investment, ” bank of canada staff analytical note no. 2017 - 7 ( july 2017 ). 11 see s. s. poloz, “ turbulent times for trade, ” ( remarks to the baffin regional chamber of commerce and the nunavut mining symposium, iqaluit, nunavut, april 1, 2019 ). 12 see, for example, the organization for economic cooperation and development ’ s main science and technology indicators and imd ’ s world competitiveness rankings for 2019, including profiles for canada and other countries. - 7spending side of the economy over the past couple of quarters. it turns out that this gap can be explained in large part by the behaviour of companies in the construction and oil and gas sectors, which have been key drivers of the recent gdp slowdown. companies in these sectors have been generally keeping their employment levels fairly steady, while reducing the hours their employees work. this is consistent with firms believing that the economy has been going through a temporary soft patch, exacerbated by the brutal winter experienced in so many parts of canada. i should point out,