In a discussion paper last year, I tried to detail how we apply this risk-management framework, using the experience of 2013 and the first half of 2014 as an illustration. But the events of the last six months have illustrated these points even more vividly.
The Bank has been setting policy with a view to balancing the risks facing both the outlook for returning inflation sustainably to its target, and the risks to financial stability such as those posed by the indebtedness of Canadian households. The sudden drop in global oil prices has increased both risks.