In this context, the spikes in spreads associated with the global financial crisis, and then later during the European debt problems in 2012, are notable (Graph 7). In the light of recent increases in long-term government bond yields across a range of advanced economies, it is worth highlighting some key points about the cost of banks' funding.
Total CPI inflation is expected to trough around 1 per cent by the middle of 2012 before rising with core inflation to the 2 per cent target by the end of 2013, as excess supply in the economy is slowly absorbed.   There are several significant risks to the inflation outlook in Canada.