growth track. trends we continue to expect a soft landing for the housing market and canada ’ s household debtto - income ratio to stabilize. nevertheless, the imbalances in the housing sector remain elevated and would pose a significant risk should economic conditions deteriorate. we are observing, anecdotally at least, an increased awareness of this risk. consumers are showing responsibility ; for example, homebuyers who opt to buy less house than they qualify for so they don ’ t find themselves overextended if interest rates rise. banks, as well, are underwriting loans more carefully, ensuring that people can service their debts if rates go up. so, while the risk could be significant, we are comfortable that it is not outsized. to sum up, the bank continues to see a gradual strengthening in the fundamental drivers of growth and inflation in canada. but this view depends largely on the projected upturn in exports and investment. there is a growing consensus that when we do get home, interest rates will still be lower than we were accustomed to in the past – both because of our shifting demographics and bis central bankers ’ speeches because, after such a long period at such unusually low levels, interest rates won ’ t need to move as much to have the same impact on the economy. with underlying inflation expected to remain below target for some time, the downside risks to inflation are important, as are the risks associated with household imbalances. the bank judges that the balance of these risks remains within the zone for which the current stance of monetary policy is appropriate and, as you know, we decided on 16 april to maintain the target for the overnight rate at 1 per cent. the timing and direction of the next change to the policy rate will depend on how new information influences the balance of risks. conclusion before tiff and i respond to your questions, i would like to take just a moment to say a few words about the man sitting next to me. tiff ’ s contributions at the bank started long ago as a new recruit with a fresh master ’ s degree in hand. his contributions throughout his career have been significant. at the bank, we will miss him for his intellect and management skills. but we will also miss a great friend to many, myself included. we can rest assured that tiff ’ s contributions to the financial welfare of canada will continue as the dean of the rotman school of business, where he will be busy ensuring that the next generation of economists

##rated to the systemic importance of the firm. options under consideration in this area include requiring systemically important institutions to hold aggregate levels of capital above current regulatory norms or to maintain a greater share of capital in the form of common equity or instruments with similar loss - absorbing attributes, such as " contingent " capital that converts to common equity when necessary to mitigate systemic risk. the financial crisis also highlighted weaknesses in liquidity risk management at major financial institutions, including an overreliance on short - term funding. to address these issues, the federal reserve helped lead the development of revised international principles for sound liquidity risk management, which have been incorporated into new interagency guidance now out for public comment. 2 in the supervisory arena, the recently completed supervisory capital assessment program ( scap ), popularly known as the stress test, was quite instructive for our efforts to strengthen our prudential oversight of the largest banking organizations. 3 this unprecedented see bank for international settlements ( 2009 ), " basel ii capital framework enhancements announced by the basel committee, " press release, july 13 ; and basel committee on banking supervision ( 2009 ), enhancements to the basel ii framework ( basel : basel committee, july ). see basel committee on banking supervision ( 2008 ), principles for sound liquidity risk management and supervision ( basel : basel committee, september ). information about the proposed guidance is available at board of governors of the federal reserve system, office of the comptroller of the currency, federal deposit insurance corporation, office of thrift supervision, and national credit union administration ( 2009 ), " agencies seek comment on proposed interagency guidance on funding and liquidity risk management, " joint press release, june 30. for more information about the scap, see ben s. bernanke ( 2009 ), " the supervisory capital assessment program, " speech delivered at the federal reserve bank of atlanta 2009 financial markets conference, held in jekyll island, ga., may 11. interagency process, which was led by the federal reserve, incorporated forward - looking, cross - firm, aggregate analyses of 19 of the largest bank holding companies, which together control a majority of the assets and loans within the u. s. banking system. drawing on the scap experience, we have increased our emphasis on horizontal examinations, which focus on particular risks or activities across a group of banking organizations, and we have broadened the scope of the resources we bring to bear on these reviews. we also