Chart 4  Outlook for Economic Activity and Prices （as of January 2017） y/y % chg.  Real GDP  CPI （all items less fresh food）  Fiscal 2016  +1.4  -0.2  Forecasts made in October 2016  +1.0  -0.1  Fiscal 2017  +1.5  +1.5  Forecasts made in October 2016  +1.3  +1.5  Fiscal 2018  +1.1  +1.7  Forecasts made in October 2016  +0.9  +1.7  Note: Figures indicate the median of the Policy Board members' forecasts (point estimates).
However, stretched valuations and some signs of overbuilding would expose the financial system to a sharp correction in house prices – which is a risk we’ve identified. The second is the elevated level of indebtedness among Canadian households. This leaves households vulnerable to an unemployment shock or a sharp rise in interest rates. The third vulnerability is our exposure to sizable potential external shocks.