Assuming the uncertainties now clouding the outlook dissipate in the second half of next year, we expect growth to accelerate to above potential at that time, absorbing the remaining small amount of excess supply. The Bank's core measure of inflation is running above our earlier projections. This largely reflects sharp increases in home and auto insurance premiums and, in Ontario, electricity prices.
Core inflation is also being pushed up by strong demand for housing. All told, core inflation is expected to peak at about 3 per cent by the end of this year.