Mar 2011 22

The U.S. Can Envy: Inflation In Canada Is Slowing

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Inflation and Gold by Paolo Camera Inflation and Gold by Paolo Camera

The trend of inflation development is noticeably different in Canada than it is in both the U.S. and the European Union. It is highly probable that the Bank of Canada will take advantage of this drop, and a raise in interest rates will soon follow.

Although the current price environment is quiet and easy to control, the central bank hasn’t moved rates yet. Since September, The Bank of Canada has maintained its benchmark rate at a steady 1.0 per cent. However, the reduction of global tensions and strong domestic growth will eventually force prices and the interest rate into motion.

Statistics Canada reported: “Core inflation, which excludes gasoline and other volatile items, slipped to 0.9 percent year-on-year in February. That was the lowest level since Statscan began recording 12-month rates in January 1985." Canada’s is aiming toward sustainable 2 per cent inflation.

Some experts believe that there is much behind the Bank of Canada’s policy normalization to take into account. According to them, a mild increase of rates will occur, but no sooner than the second half of April. According to the available data, there is no reason for the Bank to continue worrying about global economic growth.

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