fully exploit the gains from increased specialization, enhanced productivity, and greater competitiveness. these four principles can be likened to the four legs of a chair. the chair is steadier when all four legs are the same length. similarly, an economy is more stable when progress is made on all four policy fronts. but what should we be doing during periods of unexpected, pronounced economic turbulence? the latest worldwide economic slowdown has increased pressures on policy - makers to take action on a number of fronts. some of them are being encouraged to erect trade barriers in order to protect favoured national sectors from foreign competition. but experience shows that such beggar - thyneighbour policies not only impose costs on the rest of the domestic economy, they also undermine global economic welfare. other policy - makers are being advised to forget about structural reforms in the short term, for fear of exacerbating economic weakness. unfortunately, this approach virtually guarantees suboptimal performance in the future and maximizes the long - term costs of dealing with the structural problems – in many cases, sowing the seeds of future crises. in many countries, weak economic growth, coupled with rising government expenditures, has recently led to a deteriorating fiscal position, reversing the hard - won gains made over the past decade. to the extent this result is driven by the automatic stabilizers in place, it is unavoidable and desirable in the short run. but policy - makers should be very careful about calls for more extensive, discretionary fiscal measures taken for stabilization purposes. such measures typically take effect long after the need for additional stimulus has passed, and they are often difficult to reverse. in the end, they often simply weaken a country's structural budget position. without a doubt, the most suitable tool for dealing with any short - term cyclical problems in the economy is monetary policy. it is flexible, easily reversible, and general in scope. if monetary policy is allowed to perform this function, then there will not be inordinate pressure on other, less appropriate, instruments and policies. but let me be clear : this is not to say that we should use monetary policy to allow us to avoid taking the necessary steps on the other three fronts. for example, it is inappropriate to erect trade barriers and then say we need more monetary stimulus. it is inappropriate to allow rigidities to build in the economy and then call on central banks to provide stimulus. the right thing to do is to continue working on steadying

about 5 %. 1 / 3 bis - central bankers'speeches finally, inflation in services excluding shelter has improved, but there are signs that price pressures remain. all this push and pull on inflation means that further declines in inflation are likely to be gradual and uneven. that suggests the path back to our 2 % target will be slow, and risks remain. overall, our outlook for both growth and inflation is largely unchanged from the october report. economic growth is expected to be modest in 2024 - weak in the first half before picking up around the middle of the year and rising to about 2½ % in 2025. with downward and upward forces largely offsetting in the near term, cpi inflation is expected to remain close to 3 % over the first half of this year. it is then expected to ease to about 2½ % by year end and return to target in 2025. in two weeks, we will release our summary of deliberations, which provides more detail about our deliberations. but let me give you a sense of our discussion. as always, governing council focused on the decision at hand - the current policy rate. and there was a clear consensus to maintain our policy rate at 5 %. we did, of course, discuss where we see the economy and inflation going and what that could mean for monetary policy going forward. what came through in the deliberations is that governing council's discussion about future policy is shifting from whether monetary policy is restrictive enough to how long to maintain the current restrictive stance. that doesn't mean we have ruled out further policy rate increases. if new developments push inflation higher, we may still need to raise rates. but what it does mean is that if the economy evolves broadly in line with the projection we published today, i expect future discussions will be about how long we maintain the policy rate at 5 %. governing council is concerned about the persistence of underlying inflation. we want to see inflationary pressures continue to ease and clear downward momentum in underlying inflation. we also discussed the risks to the economy and inflation. we are trying to balance the risks of over - and under - tightening. we don't want to cool the economy more than necessary. but we don't want canadians to have to continue to live with elevated inflation either. we remain focused on a number of indicators of underlying inflationary pressures. we need to see further and sustained easing of core inflation. with the economy now looking to be in modest excess supply,