Thank you, Mr. Chair.
Mr. Macklem and Ms. Rogers, thank you both for being here today. We always appreciate your excellent analysis of the economic situation.
Mr. Macklem, you said that inflation had peaked in June at 8.1% and dropped to 6.3% in December. The monetary policy seems to be working, then. According to your projections or scenario, inflation could fall to 3% in the middle of 2023 and reach the 2% target by the end of the year or in 2024.
You and Mr. Baker spoke a bit about risk assessment and forecasts. If your forecast comes true, it would be the ideal situation, almost idyllic. That's what I would call the best-case scenario.
I'd like to hear your thoughts on the risks that come with other scenarios, which I'll get into.
I'll start with this. What are the recession risks right now?
I would also like you to talk about the possibility of U‑shaped inflation. By that I mean inflation that continues to drop but starts to rise again at the end of the year because of a robust labour market and higher-than-expected economic growth internationally. What are the risks of that scenario?
Above all, I would like you to comment on the possibility of inflation holding at 3% or 4% annually, instead of returning to the 2% target, mainly because of the services sector. What are the risks of monetary policy not being able to bring inflation back to the 2% target quickly and inflation staying at 3% or 4%?
In that situation, would you pursue a more restrictive monetary policy at all costs, or would you wait to see how the economy responded in the face of a steady inflation rate of 3% or 4%?
I covered a lot there, so take all the time you need.