Published on Wednesday, Dec. 16, 2009 3:49PM EST Last updated on Wednesday, Dec. 16, 2009 8:20PM EST
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North America's prospects brighten
North America's economic prospects continue to brighten, although the march to a sustained recovery is painfully slow. The Canadian and U.S. central banks today both cited an improving economy, with no hints of raising interest rates until well into next year.
The Federal Reserve this afternoon held its benchmark Federal funds rate at its historic low, pledging again to keep it there for an extended period. Notable in the central bank's statement was that, since its committee last met in November, signs suggest that “economic activity has continued to pick up and that the deterioration in the labour market is abating.” While those are strong signs, the U.S. housing market is still working its way out of the doldrums, and millions of Americans have lost their jobs. So, the Fed warned, “household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labour market, modest income growth, lower housing wealth, and tight credit.”
Separately, speaking to a Toronto business audience this afternoon, and later to reporters, Bank of Canada Governor Mark Carney also said the outlook is improving. He also cited signs of a stabilizing labour market, and said he expects the real estate sector to also continue to strengthen. Mr. Carney also warned again that borrowers should not take on more debt at today's low rates than they can handle when rates rise.