track. • recent developments are in line with the bank ’ s expectation of a soft landing in the housing market and stabilizing debt - to - income ratios for households. still, household imbalances remain elevated and would pose a significant risk should economic conditions deteriorate. • in sum, the bank continues to see a gradual strengthening in the fundamental drivers of growth and inflation in canada. this view hinges critically on the projected upturn in exports and investment. with underlying inflation expected to remain below target for some time, the downside risks to inflation remain important. at the same time, the risks associated with household imbalances remain elevated. • the bank judges that the balance of these risks remains within the zone for which the current stance of monetary policy is appropriate and therefore has decided 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. with that, tiff and i would be pleased to take your questions. bis central bankers ’ speeches

stephen s poloz : summary of the latest monetary policy report opening statement ( via video ) by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, toronto, ontario, 16 april 2014. * * * good morning. tiff and i are pleased to join you today by videoconference. as you know, we are in toronto to attend the funeral this afternoon of canada ’ s former finance minister, jim flaherty. before we discuss the monetary policy report, i ’ d like to say a few words about him. what set jim flaherty apart was that while he was a formidable finance minister, he was first and foremost an ordinary man. you immediately connected to him after just a few minutes, and it was immediately clear that he was there for canada, 100 per cent. that ’ s what he did all day, every day. and to everything that he did, he brought a solid dose of common sense. people found that attractive and helpful, and his gut instincts were usually right. a lot of his legacy is right there for us. i ’ ll miss him tremendously, and canada is the poorer without him. let me turn now to the mpr, which the bank published this morning. before we take your questions, allow me to note its highlights. • inflation in canada remains low. core inflation is expected to stay well below our 2 per cent target this year and it will take close to two years for it to return to the target. total cpi inflation is expected to move closer to the target in the coming quarters due to temporary factors. • let me take a moment to explain this inflation forecast. core inflation is expected to remain below target due to the effects of economic slack and heightened retail competition. we expect these effects to persist until early 2016. • however, total cpi inflation will move up this year, before core, in response to higher consumer energy prices, as well as the lower canadian dollar. • we expect total cpi inflation will remain fairly close to target throughout the projection period. that ’ s because in 2015 and into early 2016, as the upward pressure from energy prices dissipates, the downward pressure from retail competition should gradually fade and excess capacity will be falling. this will cause core inflation to make its way gradually up to 2 per cent, catching up to total cpi inflation from below. • the global economic expansion is expected to strengthen over the next three years as