sheet. as of this week, we are no longer replacing maturing government of canada bonds with new ones, so our balance sheet will shrink. this brings our exceptional monetary policy response full circle. when the economy needed exceptional support in the depth of the recession, we lowered our policy rate to its lower bound and complemented this with quantitative easing or qe. last november we ended qe and began reinvestment. we have now moved to quantitative tightening or qt. with the economy fully recovered, it is time to normalize our balance sheet. qt will complement increases in our policy rate by putting upward pressure on longer - term interest rates. let me stop here. senior deputy governor rogers and i will be happy to take your questions. 3 / 3 bis central bankers'speeches

and wage growth has reached pre - pandemic levels. businesses can ’ t find enough workers to meet demand and they are telling us they ’ ll need to raise wages to attract and retain staff. we expect strong growth to continue in the months ahead. as remaining public health restrictions ease, canadians are spending more on services — travel and recreation, lodging and restaurants. and we ’ re still buying a lot of goods. housing activity is still strong, and while we expect it to moderate, it will remain elevated. business investment and exports are both picking up, and higher prices for many of the commodities canada exports are bringing more income into the country. robust business investment, improved labour productivity and higher immigration should help 1 / 3 bis central bankers'speeches boost the economy ’ s productive capacity. and higher interest rates will slow spending. putting this all together, the bank forecasts the canadian economy will grow 4¼ % this year, before moderating to 3¼ % in 2023 and 2¼ % in 2024. that brings me to my second point — the bank ’ s primary focus is inflation. consumer price index ( cpi ) inflation in canada hit a three - decade high of 6. 7 % in march, well above what we projected in the january mpr. the war has driven up the prices of energy and other commodities, and it is further disrupting global supply chains. while most of the factors pushing up inflation come from beyond our borders, with the economy in excess demand, we are facing domestic price pressures too. about two - thirds of cpi components are growing above 3 %, which means canadians are feeling inflation across their household budgets, from gas to groceries to rent. our latest outlook is for inflation to average almost 6 % in the first half of 2022 and remain well above our 1 % to 3 % control range throughout this year. we then expect it to ease to about 2½ % in the second half of 2023 before returning to the 2 % target in 2024. high inflation affects everyone. inflation at 5 % for a year — or 3 percentage points above our target — costs the average canadian an additional $ 2000 a year. and it is affecting more vulnerable members of society the most, both because they spend all their income and because prices of essential items like food and energy have risen sharply. this broadening in price pressures is a big concern. it makes it more difficult for canadians to avoid inflation, no matter how patient or prudent they are as shop