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Curiously enough, my car is also a Toyota Matrix.

The numbers on the Y-axis of the chart don't make a whole lot of sense. The number above 1450 should be 1500, and so on.

I just noticed that. Something happened to the y axis labels while I was putting the graph together.

Out of curiosity, I put the Bank's forecast for inflation and the output gap into the policy rule used in ToTEM to proxy for the future path of the overnight rate. This rule gives very little weight to the output gap but puts a high weight on the deviation of expected core inflation (two quarters ahead) from target. Interestingly, because the Bank expects core inflation to decline in the first half of 2012, the ToTEM rule would call for a CUT in the overnight rate to 0.50 by the middle of the year, and then return to 1.00 by the end of 2012, followed by a very gradual increase thereafter.

I'm curious where the Bank thinks growth is going to come from in 2013, particularly given the large downward forecast revision to US growth in 2013 (to 2.2 from 3.3).

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