around housing and debt, and we have re - estimated all of our model ’ s parameters using advanced methods. you can find details in the appendix in the mpr. we do find that the economy is likely to respond more to higher interest rates at today ’ s debt levels than historically. even so, we have to allow for the possibility that these improved estimates fall short of the mark. furthermore, we have to watch how the household sector reacts to the new rules around mortgage underwriting. it will take time to understand the impact of these changes as well as the economy ’ s sensitivity to higher interest rates. governing council expects that incoming data and new research will shed more light on these four issues as we move forward. there is also a range of other risks that we outline in the mpr, which, taken together, give us a balanced outlook for inflation. as well, there is uncertainty surrounding the possibility of a significant shift toward more - protectionist trade policies in the united states, which we have chosen not to incorporate in our projection. given our recent history with inflation running below target, we continue to be more preoccupied with the downside risks to inflation. the bottom line is that governing council will be cautious in considering future interest rate adjustments and will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation. with that, senior deputy governor wilkins and i will be happy to take your questions. 2 / 2 bis central bankers'speeches

stephen s poloz : release of the monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 25 october 2017. * * * good morning. senior deputy governor wilkins and i are pleased to be here to answer your questions about today ’ s interest rate announcement and our monetary policy report ( mpr ). as you know, governing council decided to raise interest rates at each of its july and september meetings, in the context of stronger - than - expected economic growth and a very strong labour market. furthermore, over the course of the summer, we saw a firming of inflation indicators and a rapidly closing output gap. as we predicted in july, the economy is showing signs of moderating in the second half of the year. nevertheless, we expect the economy to continue to grow at an above - potential pace. today, we left our policy rate unchanged at 1 per cent. we regard this level as appropriate in light of our updated projection for the economy and inflation — in particular, we expect inflation to reach our 2 per cent target in the second half of 2018. this is a little later than we projected in july, primarily because the canadian dollar has strengthened in 2017. before taking your questions, let me offer a few comments around governing council ’ s deliberations. governing council agreed that the economy is likely to require less monetary stimulus over time, but we will be cautious in making future adjustments to our policy rate. four key issues are adding uncertainty to the projection. these are the same four issues that i highlighted in my recent speech in st. john ’ s, and they played an important role in our deliberations for today ’ s decision. discussion of these issues features strongly in today ’ s mpr. the first issue on which governing council spent considerable time is around inflation itself. in this mpr, we investigate a number of conjectures around the apparent softness of inflation in several advanced economies. i refer you to box 1 of the mpr. these conjectures include a role for technology, specifically digitalization, which may be putting downward pressure on inflation ; a role for imported disinflation from lower - cost countries ; or more generally, a role for the forces of globalization. suffice to say that for the canadian data, this work has generally confirmed our faith in our model of inflation, in which inflation depends mainly on the degree of excess