positives to begin to reassert themselves during the second quarter, and to do so clearly in the second half of the year. the interest rate cut in january and the lower canadian dollar are working to speed up the transition. inflation, as measured by total cpi, is running at about 1 per cent, well below our 2 per cent target. this is largely due to the drop in gasoline prices, a temporary effect. total cpi inflation would be quite close to zero were it not for exchange - rate effects and some additional one - time factors. core inflation is a little over 2 per cent, but it is also being boosted by exchange - rate effects and other one - time factors. in our projection, total inflation and core inflation converge on 2 per cent as these temporary factors dissipate and the economy reaches full capacity, around the end of 2016. meanwhile, financial stability risks remain front - and - centre in our deliberations. these risks are evolving in line with our expectations. the level of indebtedness, as measured by the ratio of debt - to - disposable income, continues to edge higher. it is likely to rise further as the decline in gross national income caused by the drop in oil prices works its way through the system. on the surface, lower interest rates would be expected to promote more borrowing, which would increase this vulnerability. however, in the near term, lower borrowing rates will actually mitigate this risk, by reducing payments for mortgage holders and giving us more economic growth and employment gains. we believe that the best contribution the bank can make to lowering financial stability risks through time is to help the economy return to full capacity and stable inflation sooner, rather than later. with that, carolyn and i would be happy to take your questions. bis central bankers ’ speeches

episode. the price drop is much smaller, the oil - producing sector is smaller, and our oil producers have improved operating efficiency considerably over the past three years. the canadian dollar has declined with oil prices, helping to buffer the effects. all other things equal, lower oil prices mean approximately 0. 5 per cent less gdp by the end of 2020, according to our models. by convention, we use current oil prices in our projection, but there is considerable uncertainty about future oil prices and their effects. governing council also talked a lot about the canadian housing market, which is taking longer to stabilize than we expected. this may be because of the various municipal or provincial measures that have been taken. or it may be that the economy is more sensitive to the combined effects of the new mortgage underwriting guidelines and higher interest rates. homebuyers are adapting by seeking smaller, lower - priced homes ; home sellers are offering lower prices ; and home builders are adapting to a growing demand for smaller homes. these adjustments are taking time, so we need to continue to monitor the situation carefully. but we must keep in mind that the markets in toronto and vancouver were exhibiting a degree of froth, and it is always difficult to judge where the market will stabilize once froth has been removed. taken together, the revisions to our outlook point to a downgrade in growth for 2019 to about 1. 7 per cent, from 2. 1 per cent previously. this results in a modest reduction in our forecast for inflation for 2019, but we expect to be back at 2 per cent by the end of this year. weighing all of these factors, governing council continues to judge that the policy interest rate will need to rise over time into a neutral range to achieve the inflation target. we are fully cognizant of the negative signals being given by financial markets. we believe that equity and bond markets are priced for downside risks and acknowledge these risks in our mpr. the trade war is already having negative consequences globally and these will continue to grow if the situation is not resolved, especially if it escalates. however, we remain of the view that this risk is two - sided — while this dispute could escalate it could also be resolved — and therefore we must take into account both possibilities in managing the risks faced by the canadian economy. as today ’ s decision to keep our key policy interest rate unchanged illustrates, we are decidedly data dependent and will adapt our inflation outlook and interest rate profile to developments as