of growth is now slightly less favourable for canada. – uncertain global and domestic economic conditions are delaying the pickup in exports and business investment in canada. this leaves the level of economic activity lower than the bank had been expecting. – while household spending remains solid and some indicators in the housing sector continue to rise, we still expect a gradual unwinding of household imbalances. – the bank expects that a better balance between domestic and foreign demand will be achieved over time and that growth will become more selfsustaining. but this will take longer than previously projected. bis central bankers ’ speeches – we are expecting investment growth to contribute to a rebound in the rate of labour productivity growth over the next couple of years. however, demographic factors, primarily the aging population, are expected to put a drag on the growth rate of trend labour input. this drag will largely offset the effects of rising investment. this is why we expect that the growth rate of potential output will remain fairly stable at around 2 per cent over the next three years. – real gdp growth is projected to increase from 1. 6 per cent this year to 2. 3 per cent next year and 2. 6 per cent in 2015. the bank expects that the economy will return gradually to full production capacity, around the end of 2015. – inflation in canada has remained low in recent months. this reflects the significant slack in the economy, heightened competition in the retail sector, and some other sector - specific factors. – with larger and more persistent excess supply in the economy, both total cpi and core inflation are expected to return more gradually to 2 per cent, around the end of 2015. • although the bank considers the risks around its projected inflation path to be balanced, the fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance. however, the bank must also take into consideration the risk of exacerbating already - elevated household imbalances. • weighing these factors, the bank judged on 23 october that the substantial monetary policy stimulus in place remained appropriate and decided to maintain the target for the overnight rate at 1 per cent. since then, while some new data points have been released, our outlook remains roughly the same, as i mentioned. if you have any questions about the recent data, tiff and i would be pleased to address them, as well as any other queries that you may have. thank you. bis central bankers ’ speeches

large movements in most currencies around the world. as for the chilean peso, in the middle of march it was trading above 640 units to the dollar, to later drop to near 620 pesos per dollar at the statistical cutoff of this report ( figure 3 ). the peso depreciation cycle that began in 2013 stands out as the longest in the last decade and it occurs in the context of a gradual economic slowdown and not a sharp recession. this is one of the main reasons behind inflation remaining above 4 percent. the data indicate that the pass - through coefficient from the exchange rate to inflation has been in line with historic patterns, although in the upper part of available estimates. besides, the peso depreciation has had different timing than most emerging or commodity exporting economies. the earlier adjustment of the chilean economy, in terms of both private expenditure and the monetary policy reaction, meant that for the larger part of 2014 our currency was one of the most depreciated globally. subsequently, as the rest of the emerging economies entered a more marked adjustment cycle, those differences narrowed and the peso even appreciated in multilateral terms ( figure 4 ). as of march, the real exchange rate is somewhat above its average for the last two decades ( figure 5 ). domestic activity has behaved as foreseen in december, although last year closed with somewhat higher growth than forecast in the previous report : 1. 9 percent. revisions to earlier figures and a somewhat stronger fourth - quarter growth explain this result. partial firstquarter figures continue to reveal moderate growth, but definitely better than the figures it showed since mid - 2014. on the demand side, there is no big news either with respect to the end of last year. aside from specific factors, consumption and investment remain weak. durable consumption and investment in machinery and equipment continue to grow at low or negative annual rates, albeit with some marginal stability. anyway, it is worth noting the greater impulse from fiscal spending, particularly public investment, and the positive effect of the peso depreciation in the productive performance of some tradable sectors. the labor market continues to show more strength than previously foreseen. the unemployment rate, despite a marginal increase, is still low. annual growth in salaried employment has picked up again in recent months, although job creation in the most cyclesensitive sectors has remained slow. meanwhile, nominal wages continue to grow at a strong pace, partly because they are generally indexed to past