are concerned about the drop in business investment, which is likely linked to ongoing trade war and related uncertainty. so, we continue to expect that economic activity will slow in the second half of the year. given canada ’ s reliance on international trade, we agreed that the trade war remains our primary concern and the biggest risk to our forecast. trade policy uncertainty has been weighing on business investment and exports for a couple of years now. and things could certainly get worse internationally, which would deliver a complex shock to our economy affecting both supply and demand. in this uncertain environment, central banks have been conducting monetary policy appropriate to their own circumstances and outlooks. this has contributed to lower bond market yields and reduced borrowing costs in canada. the bank of canada will continue to conduct monetary policy appropriate to our own circumstances. we will continue to ground our decisions in our policy framework, 9 see h. lao and c. steyn, “ a comprehensive evaluation of measures of core inflation for canada : an update. ” bank of canada staff discussion paper no. 2019 - 9. note that these measures do not perfectly filter any relative price shocks. for example, the auto component of the cpi is idiosyncratic and relatively volatile ; thus, one - time changes in auto prices can affect core inflation measures. it has a larger effect on cpi - median and cpi - trim than on cpi - common. - 7setting interest rates to achieve our inflation target, mindful of the implications for financial vulnerabilities. our current policy setting of 1. 75 percent, which is 50 basis points below the us policy rate, continues to support the economy. to sum up, as i said earlier, canada ’ s economy is operating close to potential and inflation is on target. however, escalating trade conflicts and related uncertainty are taking a toll on the global and canadian economies. in this context, the current degree of monetary policy stimulus remains appropriate. as the bank works to update its projection in light of incoming data, governing council will pay particular attention to global developments and their impact on the outlook for canadian growth and inflation. i hope i have been able to shed some light on the bank ’ s rate - setting process. i thank you for your attention and look forward to answering your questions.

supply in the economy, heightened competitive pressures in the retail sector, and some special factors. total cpi inflation has been restrained by low core inflation and declining mortgage interest costs, with some offset from higher gasoline prices. • both total and core inflation are expected to remain subdued in coming quarters before gradually rising to 2 per cent by mid - 2015 as the economy returns to full bis central bankers ’ speeches capacity, the special factors subside, and inflation expectations remain wellanchored. • the inflation outlook in canada is subject to upside and downside risks, which are similar to those identified in january. • the three main upside risks relate to the possibility of stronger - than - expected growth in the u. s. and global economies, a sharper - than - expected rebound in canadian exports, and renewed momentum in canadian residential investment. • the three main downside risks relate to the european crisis, more protracted weakness in business investment and exports in canada, and the possibility that growth in canadian household spending could be weaker. • overall, the bank judges that the risks are roughly balanced over the projection horizon. • reflecting all of these factors, on 17 april, the bank maintained the target for the overnight rate at 1 per cent. • with continued slack in the canadian economy, the muted outlook for inflation, and the constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required, consistent with achieving the 2 per cent inflation target. with that, tiff and i would be pleased to take your questions. bis central bankers ’ speeches