We now project growth to average about 2 3/4 per cent in 2004, and to pick up to about 3 3/4 per cent in 2005. This would imply that the output gap would not change materially before the end of 2004, but would be substantially closed by the third quarter of 2005.
We project that core inflation will fall below 1 1/2 per cent in early 2004, before gradually moving back to the 2 per cent target by the end of 2005. Total CPI inflation should remain below core inflation through 2005 if oil prices ease gradually from their current levels.