Overnight Moves: The Bank of Canada Should Start to Raise Interest Rates Now

Michael Parkin ()

C.D. Howe Institute Backgrounder, 2011, issue 139

Abstract: When the Bank of Canada will begin raising interest rates is looking very different than when it should even though the risks of postponement are growing. If more “no-change” decisions are made by the Bank of Canada regarding its policy interest rate, inflation expectations might begin to slip loose of their 2 percent anchor. Further, with the Fed continuing to hold a near-zero rate, the US dollar is likely to continue its steady slide. If the Canadian dollar moves at least partially with the US dollar, because the Bank of Canada keeps its interest rate close to the federal funds rate, the higher inflation rates of energy and other commodity prices that are currently deemed temporary might start to look permanent.

Keywords: Monetary Policy; Bank of Canada; interest rates; inflation rate (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2011
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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