Craig Scott from Ottawa, writes: Pitty for all of those people living on their line of credit. Those interest payments will soon start to add up. Mortgage payments will go up and all the while our wages continue to be stagnant....thanks a lot
Posted 25/04/06 at 10:31 AM EDT |
Hansen Brother from Calgary, Canada writes: Here in Calgary inflation is definitely taking hold. The price of houses are skyrocketing, jobs abound everywhere (walk around a shpping mall and almost every store has a help wanted ad), the price of goods and services (quality is questionable) are going up. The interest rate hike is good for Alberta, but I'm not sure if it's a good thing for other parts of Canada. Can we have regional rate hikes? I guess that's not possible right now, but is it feasible?
Posted 25/04/06 at 10:38 AM EDT |
Marty Jenkins from Toronto, Canada writes: Maybe this will temper the out of control real estate market! It makes me sick the way that ordinary home prices have been driven up by speculators, developers, and folks deluded by abnormally low interest rates. I say keep those rate increases coming to bring these prices in line!
Posted 25/04/06 at 10:45 AM EDT | Bank of Canada raises rates
TAVIA GRANT
Globe and Mail Update
The Bank of Canada raised its key lending rate to 4 per cent from 3.75 per cent Tuesday, the sixth straight rate increase, and reiterated its statement that more modest increases may be needed.
The bank has boosted rates at each opportunity since September on expectations an economy operating at full steam will, further down the road, drive up inflation. Tuesday's statement said the economy was operating at, “or just above,” its production capacity.
“Some modest further increase in the policy interest rate may be required to keep aggregate supply and demand in balance and inflation on target,” the central bank said.
For the first time, the bank said it will keep a close eye on any developments in the Canadian economy in light of the rate increases since September. That suggests the central bank is becoming more “data dependent,” or reliant on fresh economic news, economists said.
“The change in tone makes the next decision on May 24 more dependent on how the growth and inflation outlook evolve in the interim,” said Ted Carmichael, economist at J.P. Morgan Securities Canada Inc. in a note.
The Canadian dollar neared a 14-year high after the announcement, trading at 88.31 cents (U.S) from yesterday's close of 88.03 cents.
The bank still judges the economy will grow 3.1 per cent this year, but boosted its 2007 forecast by a notch to 3 per cent. Growth is seen at 2.9 per cent in 2008.
The central bank said the global economy has been growing at a robust pace in recent months, showing a little more oomph than it had expected.
“This global strength and the associated higher prices of many commodities, together with strong domestic demand in Canada, have produced solid growth in the Canadian economy at a pace consistent with the bank's outlook” in January.
At the same time though, global competition and the strong Canadian dollar continue to pose challenges for a number of sectors of the economy, the bank said.
High energy prices have kept total consumer price inflation slightly above the bank's 2-per-cent target. However, core inflation has remained below 2 per cent owing to persistent downward pressure from prices of imported consumer goods.
In the years ahead, it expects total inflation will average close to 2 per cent in 2007 and 2008, excluding the effect of any changes in the goods-and-services tax.
“The bank judges that the risks to its projection are roughly balanced, with a small tilt to the downside later in the projection period,” it said.
A more detailed analysis on the Canadian economy will come on Thursday with the monetary policy report.
Posted by at April 25, 2006 11:13 AM