important risks remain around this outlook. the three main upside risks to the inflation outlook are higher commodity prices, a stronger - than - anticipated recovery in the u. s. economy, and the possibility of greater - than - projected momentum in the canadian household sector. these upside risks are balanced by three downside risks relating to canada ’ s international competitiveness, global growth prospects, and the possibility of a more pronounced correction in the canadian housing market. these risks are balanced. on 19 october 2010, the bank maintained the target for the overnight rate at 1 per cent. this leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in canada. at this time of transition in the global recovery, with a weaker u. s. outlook, constraints beginning to moderate growth in emerging - market economies, and domestic considerations that are expected to slow consumption and housing activity in canada, any further reduction in monetary policy stimulus would need to be carefully considered. with that, tiff and i would be pleased to take your questions.

exchange. the high share prices and the positive expectations have stimulated demand and the debt ratio in the private sector has increased. it is not possible to write off the risk of financial imbalances being built up in the usa, which risks having negative effects on the macroeconomy. however, many analysts consider that the long - term growth rate has in fact increased in the american economy and that the expectations that have served as the basis for investments and increased indebtedness will therefore be realised. even if there are some indications that point to the swedish economy undergoing a similar development to the american, the structural differences cannot be disregarded, which probably create greater inertia in the swedish economy than in the usa. the labour market is one such area. as i mentioned earlier, considerable barriers to competition also remain in the swedish economy. another difference is that the cyclical upswing we are now experiencing is taking place at the same time as growth is increasing in the surrounding world and resource use is increasing. the american upswing could benefit from a surrounding world with a lot of free resources and low price pressure and with few competing investment alternatives for international investors. should monetary policy counteract financial imbalances? how shall monetary policy be designed if there is a risk for exaggerated indebtedness and overheating? a decision - making rule the riksbank sometimes uses to motivate its monetary policy decisions can in simple terms be described as follows : when inflation exceeds the target in a one - to - two year horizon, then the interest rate is increased. interest rate increases reduce the demand for goods and services, which in turn reduces inflationary pressure. in our simple conceptual framework, inflationary pressure is then assumed to vary with the use of resources in the economy. when there is free capacity, inflationary pressure is low in the absence of so - called shocks. when demand is so high that it exceeds the level that is compatible with the long - term production path, inflation tends instead to exceed the target. the line of reasoning is based on inflationary expectations being established close to the target for monetary policy. price increases when demand is strong may for instance depend on bottlenecks being created in some part of the production chain. as the company in this situation, cannot improve its profits by increasing its volume of sales, profit margins are increased by price increases. shortage of labour also increases the risk for excessively high wage increases. the result will be higher inflation. if we strictly apply