Introduction
Good morning. It's a pleasure to be here in Alberta. I want to thank Calgary Economic Development for the invitation. The last time I spoke in Calgary was about 18 months ago-September 2023. The post-pandemic crisis was easing, but uncertainty remained. Inflation was still above 3%, and the Bank of Canada's policy interest rate was 5%. Canadians were being squeezed by still-elevated inflation and higher interest rates. Could we get inflation back to our 2% target without tipping the economy into recession?
As 2024 closed out, this question was largely resolved. Inflation was on target, and economic growth had picked up. The Canadian economy was in good shape.
Inflation came down through the first half of last year and had been close to 2% since last summer. As the Bank's Governing Council became more confident that inflation was on track to return to target, we began reducing our policy interest rate, starting last spring. Substantial rate cuts through the rest of the year boosted household spending, and economic growth picked up to 2.2% in the third quarter and 2.6% in the fourth. Employment growth also strengthened in November through January, and the unemployment rate came down.
The Canadian economy managed a soft landing. Unfortunately, we're not going to stay on the tarmac for long.
