Bank of Canada raises interest rate third time since June 2010

Sept. 8, 2010 - PRLog -- Toronto | September 8th, 2010 | World Wealth Builders |

The decision marks the third straight month that the central bank has boosted the rate, which was set at a rock-bottom 0.25 per cent during the recession. The overnight lending rate affects short-term borrowing, such as variable-rate mortgages and some lines of credit.

The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding but remains uneven, balancing strong activity in emerging market economies with weak growth in some advanced economies. In the United States, the recovery in private demand is being held back by high unemployment and recent indicators suggest a more muted recovery in the near term.

Against this backdrop, the Bank decided to increase its target for the overnight rate to 1 per cent. As a result of monetary policy measures taken since April, financial conditions in Canada have tightened modestly but remain exceptionally simulative. This is consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada.

Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.

"The interest hike was expected and due and it will have impact on short-term borrowing, such as variable-rate mortgages and some lines of credit ” says Navtaj  Chandhoke, founder of Professional Real Estate Investors Group (PREIG) Canada."This was one of the tough decisions Mark Carney has to make due to Global and Canadian economy."

The increase was the bank’s third since June, and most economists, including Durocher, now forecast Governor Mark Carney will keep the rate at 1 percent until April.

Canada's economy has shown recent signs of ongoing struggle. July's jobs numbers saw unemployment rise slightly to 8 per cent, and summer real estate numbers showed a significant cooling in the housing market.

# # #

World Wealth Builders conveys action-orientated Real Estate education, coaching and mentoring. We provide wealth creating secrets, innovative strategies and step-by-step practical how-to methods through dynamic hands-on apprenticeships for Canadians.
http://www.WorldWealthBuilders.com