compensation stays moderate and inflation expectations remain well anchored. given the recent drop in gasoline prices and with futures prices suggesting persistently lower oil prices, the bank expects total cpi inflation to remain noticeably below the 2 per cent target over the coming year before returning to target around mid - 2013. the inflation outlook in canada is subject to significant risks. bis central bankers ’ speeches the three main upside risks to inflation in canada relate to the possibility of higher global inflationary pressures, stronger canadian exports and stronger momentum in canadian household spending. the three main downside risks to inflation in canada relate to the european crisis, weaker global momentum and the possibility that growth in canadian household spending could be weaker. overall, the bank judges that the risks to the inflation outlook in canada are roughly balanced over the projection period. reflecting all of these factors, the bank yesterday maintained the target for the overnight rate at 1 per cent. to the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. the timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments. with that, tiff and i would be pleased to take your questions. bis central bankers ’ speeches

investment, immigration and trade with the british empire. but this business model was disrupted in 1846, when the british government eliminated all tariffs on grain imports to reduce food prices. that meant that grain shipped through the st. lawrence no longer had preferential access to the uk market compared with, say, shipments from new york. prelude to confederation the hard feelings from the war of 1812 had faded as our second episode began. the canadian colonies reacted to the loss of preferential access to britain by becoming more open to trade with the united states. after several years of negotiations, and after overcoming significant protectionist sentiment on both sides, the province of canada struck a reciprocity agreement with the united states in 1854 — essentially, a free - trade agreement in resources. meanwhile, the irish famine touched off waves of immigration into the colonies and the united states, fuelling growth. the colonies actively sought foreign investment to support the construction of railways, so goods could move in winter as well as in summer. most of the investment to finance these projects came from overseas, primarily from britain. with growing trade, an expanding population, foreign investment and improved transportation links in the colonies, the years just before confederation were generally a time of economic growth. however, the fiscal cost of supporting the railroads was high. the province of canada found itself forced to raise revenue, and it did so by imposing tariffs on some imported factory goods. not surprisingly, this did not sit well with manufacturers in the northern united states. this resentment grew as britain continued to trade with the southern states during the civil war. after the war, with the northern states in the driver ’ s seat, protectionist sentiment carried the day, and the united states backed out of the reciprocity treaty with canada in 1866. once again, canada ’ s business model was disrupted as we lost preferential access to a major market. this was a key driver to the event that we are celebrating this year : the founding of the dominion of canada 150 years ago. back in 1867, we became a nation of 3. 5 million people, with more than 80 per cent of the workforce involved in agriculture or other natural resources. nation building and struggles after confederation 2 / 7 bis central bankers'speeches our third episode begins at confederation. with access to us markets restricted by high tariffs, canada needed railways more than ever to move goods and people over long distances, east – west rather than north – south. it is no exaggeration to say that without railways, there