2025. 1 / 2 bis - central bankers'speeches what does all of that mean for inflation? we've come a long way from the 8. 1 % inflation we saw last summer. as i mentioned, annual cpi inflation was down to 4. 3 % in march, led by falling goods price inflation, and we see further declines ahead. that's good news. but many canadians are still struggling to manage the rising cost of living, and prices of many things that people need to buy are still rising too quickly. food price inflation is just under 10 %. we expect food price inflation to come down in the months ahead, but services price inflation will take longer. continued strong demand and the tight labour market are putting upward pressure on many services prices, and those are expected to decline only gradually. we expect it will take until the end of 2024 to get inflation all the way back to the 2 % target. when we met last week, the bank's governing council discussed whether we've raised rates enough, and we considered the likelihood that the policy rate may need to remain restrictive for longer to return inflation to the 2 % target. governing council also discussed the risks around our projection. the biggest upside risk is one i just mentioned - that services price inflation could be stickier than projected. the key downside risk is a global recession. if global banking stress re - emerges, we could be facing a more severe global slowdown and much lower commodity prices. overall, we view the risks around our inflation forecast to be roughly balanced, but with inflation still well above our target, we continue to be more concerned about the upside risks. let me conclude. our job at the bank of canada is to get inflation all the way back to the 2 % target. we are encouraged with the progress so far. and seeing inflation get down to 3 % this summer will be welcome relief for canadians. but let me assure canadians that we know our job is not done until we restore price stability. price stability is important because it restores the competitive forces in the economy and allows canadians to plan and invest with the confidence that their money will hold its value. that's the destination - we are on our way and we will stay the course. with that summary, the senior deputy governor and i would be pleased to take your questions. 2 / 2 bis - central bankers'speeches

however, that step might not suffice to convince markets and agents in the real economy that we are serious about reaching the inflation target. allowing for a period of above - target inflation to compensate for a sustained undershoot might be an additional tool to increase inflation expectations. crucially, we must maintain our flexibility in order to ensure that we continue to effectively carry out our mandate. beyond monetary policy, the importance of macroprudential policy will only grow in the low interest rate environment – especially considering the current level of monetary accommodation and the possible side effects of the non - standard measures. the time is coming when policymakers will need to consider tightening selected macroprudential policy tools to tackle pockets of elevated vulnerability. for instance, throughout the covid - 19 crisis the demand for housing continued to increase in many countries, drawing attention to risks in the residential real estate sector. these include a possible house price overvaluation, elevated household indebtedness and high residential real estate exposures of banks. let me now turn to the emerging markets. during the peak of the pandemic crisis, capital outflows from emerging market economies ( emes ) were unprecedented in scale and speed – but also short - lived. emes, including moldova, shed their “ fear of floating ” and allowed the exchange rate to move and absorb the shock. in sharp contrast to previous crises a full one - third of emes have employed quantitative easing ( qe ). in the past, emes generally tightened monetary policy to avoid rapid capital outflows and the inflationary effect of exchange rate depreciations. the current crisis has seen eme policy reaction being more in line with that of advances economies, with qe being launched even 2 / 3 bis central bankers'speeches before reaching the zero lower bound on policy rates. financial markets mostly responded favourably to the qe announcements. central banks successfully communicated that they stood behind their sovereign should fiscal expansion undermine investor confidence. long - term interest rates decreased in response, while exchange rates did not move significantly. how can we explain this eme resilience? of course, large - scale injections of new liquidity by the fed and other systemic central banks have eased global financial conditions and redirected investors to emes in the quest for better - yielding asset classes. let us not underestimate, however, the progress achieved by the emes themselves. in recent years, a number of emes have strengthened their monetary policy