, 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 well - anchored. factors subside, and inflation expectations remain • 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, the bank today 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

our economic performance in the decade ahead? this sounds like a tall order! so before i raise expectations too much, let me say that i do not have answers for all these questions. there are, however, several important steps we can take that would increase our chances of preserving the current economic expansion and help improve our performance over the long run. let me start at the beginning - with sound economic policies.... keep inflation low and stable i see low and stable inflation as an essential building block of a strong economic structure. is this just my bias as a central banker? perhaps, but there are good reasons for it. inflation carries with it costs that are more profound and widespread than is commonly recognized. inflation magnifies uncertainty about the future : when prices are rising, the rate of inflation is rarely stable or predictable. inflation distorts and confuses the information and incentives that consumers, entrepreneurs, savers and investors rely on to make their economic decisions. and it causes households and businesses to spend time and money to try to shield themselves, or to benefit, from the effects of rising prices by turning to speculative assets ( such as real estate ) and away from productive investments. we saw a lot of this during the high - inflation days of the 1970s and 1980s. we also saw our interest rates rise higher and higher to compensate savers for expected higher inflation and for the risks caused by uncertainty about future inflation. and we saw economic booms turn into busts. so the focus of central banks on price stability these days is neither accidental nor whimsical. it is deliberate. and it has to do with reducing the toll that inflation takes on the economy and minimizing economic ups and downs. put another way, if the goal of economic policies is a productive, well - functioning economy, capable of creating new jobs and delivering higher standards of living over time, then low and stable inflation is a crucial means to that end. that is why the bank of canada and the government of canada have agreed to an explicit target for inflation control, which currently aims to hold inflation inside a range of 1 to 3 %. there are already signs that this commitment is paying off in helping to reduce the fluctuations in our economy. in the nine years that the inflation targets have been in place, not only has the underlying rate of inflation been much lower than in the previous two decades, but the pace of economic activity has been less variable from one quarter to the next.... keep public