companies are expecting their sales to either level off or increase modestly over the next year. overall, more firms than in recent surveys say they plan to boost investment spending over the next 12 months. household spending has continued to support the economy, with employment and income continuing to grow outside of energy - intensive regions, particularly in service industries. the bank ’ s accommodative monetary policy will continue to buffer the impact on wealth and income stemming from the fall in resource prices. the rollout of the canada child benefit should start giving an extra boost to households in the second half of this year. as well, the impact of the federal infrastructure spending that was announced in budget 2016 should begin to be felt. we continue to project that these measures together will boost the level of canadian gdp by about 1 per cent over the 2017 – 18 fiscal year. one other new development i ’ d mention is the government ’ s measures to promote stability in the housing market. with house prices still elevated in the vancouver area and resales and starts still robust around toronto, these measures should dampen resale activity in the near term. our analysis and historical experience suggest these measures will reduce the level of gdp by about 0. 3 per cent by the end of 2018, although there is much uncertainty around that estimate. while household debt levels have continued to increase, these measures should, over time, help ease the growth of economic vulnerabilities related to household debt and housing. all told, we now expect growth over the third and fourth quarters to average about 2 1 / 2 per cent, which is lower than we anticipated in our last mpr in july. this reduction reflects the downward revision to exports, the pullback in housing and a shift in the timing of federal infrastructure measures that pushes some of the impact into 2017. we have reduced our growth estimate for this year to 1. 1 per cent. the expansion in both 2017 and 2018 should be about 2. 0 per cent, higher than the growth rate of potential. however, because the output gap is now somewhat larger than we projected and will close later than we expected in july, the profile for inflation is now slightly lower. we project that total cpi inflation will remain below 2 per cent through the end of the year, as disinflationary pressures linked to excess capacity and year - over - year price swings for gasoline will more than offset the inflationary pressure coming from a lower exchange rate. total inflation should be close to the 2 per cent

in order to achieve a set of objectives such as support and maintain confidence in the monetary and exchange rate policies, limit external vulnerabilities by maintaining foreign currency liquidity to absorb shocks during times of crisis, to provide a level of confidence to markets, demonstrate the backing of domestic currency by external assets and meeting its foreign exchange needs and external debt obligations. 27. however, the design of investment portfolios varies widely across countries, reflecting essentially the exposure to liquidity, currency, interest rate and counterparty credit risks and the scope of active management thereof. portfolio design takes into account a host of factors such as exchange rate regime adopted by the country, the extent of openness of the economy, the size of the external sector in a country ’ s gdp and integration of financial markets. 5 / 7 bis central bankers'speeches 28. india has been frontrunner in terms of international best practices in the management of foreign exchange reserves. according to latest international monetary fund ( imf ) guidelines, reserve management should seek to ensure that ( 1 ) adequate foreign exchange reserves are available for meeting a defined range of objectives ; ( 2 ) liquidity, market, credit, legal, settlement, custodial, and operational risks are controlled in a prudent manner ; and ( 3 ) subject to liquidity and other risk constraints, reasonable risk - adjusted returns are generated over the medium to long term on the funds invested. the broad objectives of reserve management in india runs on similar lines. while liquidity and safety constitute the twin objectives of reserve management in india, return optimisation is kept in view within this framework. it can be found even in the preamble of the reserve bank of india ( rbi ) act 1934, ‘ to use the currency system to the country ’ s advantage and with a view to securing monetary stability ’. here monetary stability may be interpreted as internal as well as external stability, implying stable exchange rate as one of the overall objectives of the reserve management policy. while internal stability implies that reserve management cannot be isolated from domestic macroeconomic stability and economic growth, the phrase ‘ to use the currency system to the country ’ s advantage ’ implies that maximum gains for the country as a whole or the economy in general, could be derived in the process of reserve management7. 29. the reserve bank of india act, 1934 provides the overarching legal framework for deployment of reserves in different foreign currency assets ( fca ) and gold within the broad parameters of currencies, instruments