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October 18, 2005

Bank of Canada raises rates, Mon., Oct. 17, 2005, 12:01 PM

Earlier today, the Bank of Canada made a decision to raise the bank rate by +25 basis points to 3.00 pct. That move was deemed necessary by the monetary authorities to combat rising inflation. Unfortunately it will strengthen the Cdn Dollar against the USD as well, which manufacturers and tourism/hospitality operators in Canada are complaining is already too high.

The BOC actually said they need to remove stimulus from the Canadian economy.

Analysts in Canada believe the BOC rate will reach 4.50 pct by the middle of 2006. If so, that will clearly impact on mortgage rates and the booming housing industry in Canada.

In my view, the BOC is doing the right thing. The Cdn economy is very strong, and will likely continue so. The energy market will remain strong, so the Cdn oil and gas producers will likely remain hot properties for international traders.

Posted by Posted by Bill Cara on October 18, 2005 12:02:34 PM | Category: Canada