because persistent excess capacity puts downward pressure on inflation, raising the risk that we will continue to fall short of our inflation target. we have recently introduced three new measures of core inflation, each with its own strengths and weaknesses. these are not target variables. rather, they are analytical tools. they help us to see through shocks and give a better guide to what is happening to the underlying trend in inflation. in particular, they are much more correlated with excess capacity than total inflation is, simply because total inflation is constantly being buffeted by temporary price disturbances. our new measures of core inflation are all below 2 per cent presently, weighed down by excess capacity in the economy. in addition, food prices have been running below expectations in recent months, due in part to enhanced competition at the retail level, something we will continue to monitor. looking ahead, governing council expects inflation to move up to close to 2 per cent in the near term, mainly because of firmer energy prices. more importantly, our growth outlook would imply a narrowing of the economy ’ s excess capacity over the course of 2017 and into 2018. so in the absence of any new shocks we would expect all inflation measures to converge sustainably on 2 per cent in the latter part of our projection horizon. to conclude, in the context of a projection that is largely unchanged, the bank ’ s governing council judges that the current stance of monetary policy is still appropriate and maintains the target for the overnight rate at 1 / 2 per cent. governing council will continue to assess the impact of ongoing developments, mindful of the significant uncertainties weighing on the outlook. thank you for your attention. now, senior deputy governor wilkins and i would be happy to take your questions. 2 / 2 bis central bankers'speeches

. this would have a major impact on the economy. that knowledge fed into our judgment and, ultimately, our decision to lower our policy rate in january and july 2015. two years later, it is our view that these cuts have helped facilitate the economy ’ s adjustment to the oil price shock and that the economic drag from lower prices is largely behind us. 8 we will be updating our outlook over the next few weeks, and it will be released on july 12 in our monetary policy report. lastly, we have established a forum for gathering fixed - income market intelligence. we wanted to better understand the shift in risk taking that we were seeing and its impact on market functioning. so, some two years ago we created the canadian fixed - income forum ( cfif ). its membership is composed of senior professionals from both buy - and sell - side firms across the country. i co - chair the committee, which meets quarterly. its goal is to explore developments in the fixed - income market by tapping into the collective expertise of the membership, including areas such as trading practices and changes in market infrastructure. the committee ’ s efforts involve research and analysis to identify potential enhancements and raise awareness of these issues. all of our meetings, presentations and minutes are published on the bank ’ s website. 9 what we are learning and how we use market intelligence as the g20 financial system reforms were being put into place there was a lot of concern among market participants about how these reforms could affect bond market liquidity. that ’ s why one of the first initiatives cfif undertook was a survey of investors active in the canadian fixedincome market. we wanted to hear first - hand whether there had been changes in liquidity and, if so, whether that had altered the trading, execution and portfolio - management practices of participants, including active domestic issuers. 4 / 7 bis central bankers'speeches we learned a great deal from the survey. 10 participants confirmed that most fixed - income instruments have experienced a slight decline in market liquidity over the past two years. they also told us that liquidity for certain products, such as investment - grade corporate bonds, has deteriorated the most. one key takeaway was that many participants have adapted to the change in liquidity by adjusting how they manage their portfolios. those adjustments include taking more time to execute by breaking up their trades into smaller pieces, holding more on - the - run securities, holding less liquid assets for longer periods of time and reducing the turnover in their