The degree of excess supply and demand varies across sectors, which means our typical measure of slack comes with a higher degree of uncertainty. Supply chain disruptions and related cost pressures continue to be an important upside risk to our inflation forecast. Our current view remains that we should see elevated inflation subside in the second half of next year.
However, we will conduct a full assessment of this risk in January when we update our projection for the economy and inflation. And that’s why yesterday we maintained the policy interest rate at the effective lower bound of 1/4 percent and maintained the Bank’s extraordinary forward guidance.