With signs of improving economy the rate cut is off the table

“Three years, five months and counting: That’s how long the Bank of Canada has kept its key interest rate fixed at a rock-bottom 1 per cent.And the rate isn’t likely to change Wednesday when central bank Governor Stephen Poloz makes his second monetary policy announcement of 2014. But with evidence that inflation is perking up a bit, the odds that Mr. Poloz’s next move is a rate increase, rather than a cut, are overwhelming.”Barrie McKenna writes in an article for the March 2, 2014 issue of Globe and Mail. McKenna continues, “combined with a cheaper Canadian dollar and better-than-expected fourth-quarter growth, the building blocks of an improving economy are starting to fall into place for Mr. Poloz, making a rate cut increasingly unwarranted. In a series of interviews at the recent G20 meeting of finance ministers and central bankers in Sydney, Australia, Mr. Poloz called the slide in the Canadian dollar a ‘welcome development’ because it means the U.S. dollar is getting stronger alongside the U.S. economy. He also said he’s feeling ‘a little more comfortable’ about disinflation risks. There was a hint of higher inflation in January. The consumer price index rose at a higher-than-expected 1.5-per-cent annual pace in January – the fastest pace in 19 months.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS  

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