Are Canadian Banks Setting the Country’s Interest Rate Policy?

October 17, 2009

When it comes to economic policy, many people believe that big business – particularly the large banks – have an undue influence that they manage to wield to their advantage. One need only google “Goldman Sachs Conspiracy” to read all about the supposed “shadow government” controlled by the venerable investment firm. Nevertheless, events transpiring in Canada this week hint that even the country credited with having the world’s “best” banking system, may also have its share of power brokers calling the shots behind the scenes.

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2.5% Overnight Lending Rate by 2011

October 14, 2009

CBC News, October 9, 2009

The Bank of Canada will push its benchmark interest rate to 2.5 per cent in the next year and a half, an economist with the Central 1 Credit Union predicted Friday.

The rate is now at 0.25 per cent and the central bank has said it will likely stay there until the spring of 2010. Helmut Pastrick, chief economist with Central 1, told CBC News the recovery remains on track, with only occasional data suggesting a setback.

He looked at gains in U.S. housing, manufacturing and government stimulus and predicted the next report on U.S. Gross Domestic Product will show the American economy started growing again this fall, perhaps by as much as four per cent, for the first time in more than a year. Read more

Hot housing market could trigger rate hikes: TD

October 7, 2009

OTTAWA — The possibility exists that the Bank of Canada may have to break its conditional pledge on interest rates should the housing market continue its red-hot performance, economists at Toronto-Dominion Bank said Tuesday.

“The Bank of Canada will likely be watching developments in Canadian real estate quite closely,” say economists Craig Alexander and Grant Bishop. “If surging existing home sales do not cool, the bank may be inclined to respond.”

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Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Will other central banks follow?

October 7, 2009

 Elliott Wave International published the following update:

On October 6, the Reserve Bank of Australia surprised the global financial community with a .25% interest rate hike, bumping it up to 3.25%.

Almost no one expected a major central bank to raise rates amidst the ongoing financial crisis. That’s why the RBA’s decision “was largely interpreted as a sign that the Australian central bank is confident in an economic recovery.” (RTT news)

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