interest rates and by the moderation in energy prices. the exact timing of the u. s. recovery, however, remains uncertain and will depend importantly on how consumer confidence evolves in that country. here in canada, the latest national accounts data, which incorporate revisions to the growth profile in the first three quarters of last year, show that the level of economic activity was not quite as high at the end of 2000 as we had estimated earlier. and, based on more recent indicators, the pace of economic expansion in the first quarter of 2001 will be slower than in the final three months of last year. we can see this clearly in the automobile industry, where there have been production cutbacks mainly in response to weaker demand and excess inventories in the united states. electronic goods and telecommunications products are two other areas where activity has slowed - although from very high levels - and where world production has been running ahead of demand. all three are high - profile sectors. so naturally they attract a lot of attention, especially in parts of canada where there is a heavy concentration of these industries. but to keep things in perspective, there is still considerable strength in a number of other areas that are important to our economy. for example, investments in the energy sector and orders in the aerospace industry here in quebec are extraordinarily strong. or take retail sales other than autos, or housing, or non - residential construction : in all those areas, and in most other service industries, the level of activity remains high. when we considered the balance of this evidence earlier this month, we concluded that there was, in the near term, room for greater monetary stimulus without putting pressure on capacity and inflation. therefore, we lowered the bank rate by 50 basis points on 6 march, bringing the total decline since january to 75 basis points. in taking this action, we also considered the uncertainties attached to the timing and extent of the expected recovery in the united states and their implications for growth of total demand in canada. the bank continues to believe that the reduction in our interest rates and rising disposable incomes, bolstered by recent tax cuts, should help to support the expansion of domestic demand in canada in the second half of the year. this additional stimulus to economic activity is consistent with keeping the core rate of inflation close to the 2 per cent midpoint of the 1 to 3 per cent inflation - control target range. as for total cpi inflation, we still expect it to move down to about 2 per

housing market : it is well documented by empirical studies that a rapid increase in debt increases the probability of financial crises and falling prices on the housing market. the economy can also become more sensitive to various shocks if households ( and companies ) are highly 4 see, for example, backman, c, c lutz ( 2018 ) and cunliffe, j ( 2019 ). 5 see finocchario et al. ( 2016 ). 2 indebted. the studies also show that, if the banking system has large exposures to the housing market, financial stability can be threatened. 6 in the riksbank ’ s task of promoting financial stability 7, it is therefore important to ensure that the banks and their borrowers have resilience to shocks that could threaten financial stability. in addition, if financial stability should start to falter, there exists a risk that it would become more difficult to conduct monetary policy. i am well aware that both functional authority and tools lie beyond the riksbank ’ s remit, but as household debt and problems on the housing market affect the way the economy works, this development is also a source of unease for the riksbank. housing prices have been rising for a long time to begin with, i would like to say a few words on how housing prices have developed in sweden. since 2005, they have more than doubled, but the price rise started before then. the fact that housing prices have risen so rapidly for such a long period of time and are now historically high can be explained by factors such as the imbalance between supply and demand for housing, rising real wages and lower taxes, which have increased households ’ disposable incomes. 8 housing prices fell in the autumn of 2017, but have since then recovered slightly. the fall in prices has also affected housing construction, which, after increasing strongly in recent years, slowed down again in 2018 and 2019. over time, the development of housing prices has contributed towards increasing household indebtedness, even if the slightly weaker development in recent years has contributed towards lending for household mortgages now increasing more slowly than previously. all in all, this has led to household debt as a proportion of disposable income ( the debt - to - income ratio ) staying relatively unchanged over the last year, but being expected to continue to increase over the coming years. 9 the debt - toincome ratio for the entire household sector is currently over 186 per cent. this is a high