The Canadian dollar posted its biggest single-day gain since July as the Bank of Canada warned that it will be raising interest rates. As the economy continues to recover, the raising of interest rates is just around the corner in an attempt to slow inflation.
The bank's "extraordinary policy" of ultra-low rates was introduced to boost the economic recovery, but as the banks feel we are well into the recovery, it is now predicted that a June rate hike is now "likely," and that the central bank is clearly much more concerned about inflation than previously indicated.
Bank governor Mark Carney is juggling competing pressures: the need to control inflation with a higher rate; the need to keep the cost of loans low to encourage business and consumer borrowing; and the strong dollar.
Although Carney expressed concern about inflation in March, the bank said it is expecting the rate to ease slightly in the second quarter, and remain slightly above the target two per cent rate this year before easing in the second half of 2011.
This is just one of the signs telling us the best days to buy real estate may be coming to an end. I hear buyers talking about ‘waiting ‘til the market bottoms out’, but that may have already past. The funny thing about the bottom of the market is that you never know it is the bottom until it starts go back up again!
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