year and about 3½ % in 2023, as consumer spending on services rebounds and business investment and exports show solid growth. putting all this together, governing council concluded that, consistent with our forecast, a rising path for interest rates will be required to moderate spending growth and bring inflation back to target. of course, we discussed when to begin increasing our policy interest rate. our approach to monetary policy throughout the pandemic has been deliberate, and we were mindful that omicron will dampen spending in the first quarter. so we decided to keep our policy rate unchanged last week, remove our commitment to hold it at its floor, and signal that rates can be expected to increase going forward. the timing and pace of those increases will be guided by the bank ’ s commitment to achieving the 2 % inflation target. this ends our emergency policy setting and signals that interest rates will now be on a rising path. this is a significant shift in monetary policy, and we judged that it is appropriate to move forward in a series of steps. by being clear and deliberate, we are really trying to cut through the noise so that monetary policy is a source of confidence rather than another source of uncertainty. let me say a final word about another important monetary policy tool — our balance sheet. the bank will keep the holdings of government of canada bonds on our balance sheet roughly constant at least until we begin to raise the policy interest rate. at that time, we will consider exiting the reinvestment phase and reducing the size of our balance sheet by allowing maturing government of canada bonds to roll off. as we have done in the past, before implementing changes to our balance sheet management, we will provide more information on our plans. with that, senior deputy governor rogers and i will be happy to take your questions. 2 / 3 bis central bankers'speeches content type ( s ) : press, speeches and appearances, opening statements 3 / 3 bis central bankers'speeches

the fourth quarter, with categories more sensitive to interest rates continuing to soften. we are aware that many purchases in the consumption category would be linked to a purchase of a new home, so that ’ s likely a contributing factor. but to better determine the factors at play, we will need more data. 5 / 6 bis central bankers'speeches conclusion although we figured the economy was in for a detour at the end of last year, that detour may wind up being longer than we had expected. it now appears the economy will be weaker in the first half of 2019 than we had projected in january. however, we still expect canadian economic growth to pick up later in the year, supported by ongoing strength in employment and rising wages. we will have more to say in april, when we will have a new economic projection, as well as our annual updated estimates for economic potential and the neutral interest rate. at yesterday ’ s decision, governing council judged that the outlook continues to warrant a policy interest rate that is below its neutral range. given the mixed picture that the data present, it will take time to gauge the persistence of below - potential growth and the implications for the inflation outlook. with increased uncertainty about the timing of future rate increases, governing council will be watching closely developments in household spending, oil markets and global trade policy. i would like to thank sharon kozicki and eric santor for help in preparing this speech. 1 see “ box 3 : the impact of rising interest rates on mortgage holders, ” bank of canada monetary policy report ( july 2018 ) : 15 – 16. 2 the bank estimates that the b - 20 guidelines would lower the level of gdp by 0. 2 per cent by the end of 2020. 3 see “ box 4 : the impact of policy changes on mortgage lending, ” bank of canada monetary policy report ( october 2018 ) : 13 – 14. 6 / 6 bis central bankers'speeches