Indeed, we judge that the economy is now operating close to its production capacity. Inflation, both total and core, has been volatile in recent months, primarily because of swings in energy prices and because of automobile purchase-incentive programs. Despite this volatility, we continue to project that core inflation will gradually move up to the 2 per cent target in 2005.
Senior Deputy Governor Wilkins and I are happy to be before you today to discuss the Bank’s Monetary Policy Report (MPR), which we published earlier today. When we were last here in October, I spoke about the factors that caused us to downgrade our outlook for the Canadian economy.