This risk remains elevated and is broadly unchanged since our previous FSR in December. Aside from our concern about household finances, the principal sources of risks to Canada’s financial stability come from the external environment. They are:   First, sovereign balance sheets remain strained in many advanced economies.
This year and next, we expect CPI inflation to be between 2 and 2½ per cent. As you would be aware, the Reserve Bank Board has held the cash rate at 1½ per cent since August 2016. This represents an accommodative setting of monetary policy, aimed at supporting the economy and employment, and returning inflation towards the mid-point of the medium-term target range.