Thank you, Chair, and good morning, everyone. We're very pleased to be here, the senior deputy governor and I, to discuss our recent policy announcement last week and our monetary policy report.

Last week we maintained the policy rate at 4.5%, and we continue to assess whether monetary policy is sufficiently restrictive to return inflation to the 2% inflation target. Since the last time we were here, we've seen a steady improvement in inflation and modest economic growth. Inflation is coming down quickly. In the data this morning, inflation for March came in at 4.3%. We forecast inflation will be around 3% this summer. We are encouraged by that, but we're also seized with the importance of staying the course and restoring price stability for Canadians.

Several things have to happen to get inflation all the way back to the 2% target. Inflation expectations need to come down further. Service price inflation and wage growth need to moderate. Corporate pricing behaviour has to normalize.

We're focused on these indicators and the evolution of core inflation to ensure that CPI inflation continues to progress towards our target. If monetary policy is not restrictive enough to get us all the way back to the 2% target, we are prepared to raise interest rates further.

Before I take your questions, let me give you some economic and financial context for our decision.

The Canadian economy remains in excess demand. Gross domestic product, GDP, growth in the first quarter of the year appears stronger than we projected in January, and the labour market is still tight. The unemployment rate, at 5%, remains near its record low, and wages continue to grow in the 4% to 5% range. Employment growth has been surprisingly strong, reflecting continued demand and increases in labour supply.

Past policy rate increases are working their way through the economy and restraining demand. Households are slowing their spending, particularly on big-ticket items. As mortgages are renewed at higher rates, more households will feel the restraining effects of monetary policy. Taking these forces into consideration, we expect Canadian GDP growth to be weak for the rest of the year before beginning to pick up gradually through 2024 and 2025.

What does all of this mean for inflation? We've come a long way from the 8% inflation that 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.

However, many Canadians are still struggling to manage the rising cost of living, and the prices for many things 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 service price inflation will take longer. Continued, strong demand and a 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 our 2% target.

When the governing council met last week, we discussed whether we've raised rates enough. 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 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 by the progress so far. When we see inflation around 3% this summer, that's going to be further welcome relief for Canadians.

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're on our way and we will stay the course.

With that summary, the senior deputy governor and I would be very pleased to take your questions. Thank you.