Growth should come in at the bottom of, or slightly below, the 3 to 4 per cent range that we anticipated in our last Update. Bear in mind that the output gap is very small.
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.