to pause and assess the impact of those moves. yesterday, we decided to leave the policy rate at its current level of 4. 50 %. we also continued our policy of quantitative tightening. it ’ s a conditional pause, though. if economic developments unfold as we projected and inflation comes down as quickly as we forecast in the january monetary policy report ( mpr ), then we shouldn ’ t need to raise rates further. but if evidence accumulates suggesting inflation may not decline in line with our forecast, we ’ re prepared to do more. looking at the data since january, governing council found a mixed picture. overall, though, things are unfolding broadly in line with our outlook. we ’ ll need to see more evidence to fully assess whether monetary policy is restrictive enough to return inflation to 2 %. for now, let me unpack recent developments and share some insight into what we discussed and how we ’ ll be thinking about things going forward. i ’ ll start with economic activity. growth in the fourth quarter of 2022 slowed more than expected, coming in flat. with consumption, government spending and net exports all increasing, the weaker - than - expected gdp was largely due to a big slowdown in inventory investment. the data did show that, in general, higher borrowing costs continue to weigh on sectors that are sensitive to interest rates, such as housing. they also showed that business investment has weakened as demand slows both in canada and abroad. we talked a lot about the labour market. job gains in canada have been surprisingly strong in recent months, and the labour market remains very tight. with weak economic growth for the next couple of quarters, however, we expect that the tightness in the labour market will ease and, as it does, pressure on wages will come down. you may remember me saying if strong wage growth isn ’ t accompanied by strong productivity growth, it will be hard to get to 2 % inflation. well, we noted that data last week showed labour productivity in canada fell for a third straight quarter, so productivity isn ’ t trending in the right direction so far. we agreed inflation is coming down largely as expected and that there has been a clear momentum shift in goods prices. but we also agreed services price 7 see p. beaudry, “ no two ways about it : why the bank is committed to getting back to 2 % ” ( speech delivered to the alberta school of business, edmonton, alberta, february 16, 2023 ). - 7

still significant gross movement of people into and out of the “ cooler ” provinces and sectors. the fact is, lots of jobs are being created all over the country, demonstrating the economy ’ s ability to respond to changing circumstances. people are crossing the country not just for the jobs, but also for better wages. no matter how you cut the data, they consistently show that workers in alberta, saskatchewan, and newfoundland and labrador have seen their wages go up faster than anywhere else in canada in recent years. interestingly, in part because of this movement of people, gaps in the unemployment rates among the provinces have not widened in response to the terms - of - trade shock ; rather, they have actually become smaller than they once were. the growth in job opportunities in hot areas is almost matched by a net migration of workers out of provinces where opportunities are less plentiful. canada ’ s labour force is demonstrating remarkable flexibility, as workers from across the country move to find good jobs and good pay. however, this is not to say it ’ s easy. in places where it ’ s hot, they are scrambling to keep up with the demand for housing. here in saskatchewan and next door in alberta, many more houses proportionately are going up than elsewhere in canada. further, the cost of maintaining a home in these provinces has increased by far more than anywhere else. for people outside the hot spots, it is a really big decision to move across the country. the people moving to the hot economies are leaving other areas – of both the country and the economy – and they are taking income and potential with them. this upheaval can be difficult for the regions and sectors that are losing workers. for families, the long - distance relationships it creates can be tough. in the long run, however, we are all better off with a positive terms - of - trade shock. while different regions and sectors adjust differently, and while these adjustments can be painful, they allow us to maximize the benefits of our rich energy endowment – and ultimately everyone gets the gift. overall, canada ’ s gross domestic income ( gdi ), a measure of the purchasing power of all income generated by domestic production, is approximately 7 per cent higher than it would have been without the improvement in the terms of trade since 2002. yes, when we break this down by region, big benefits are accruing to the three oil - producing provinces. but those who suspect gdi is falling elsewhere will have to think again. rather