Todd Hirsch: What's the Bank of Canada thinking these days?
Tuesday, October 23, 2007 | 08:00 AM ET
Money Talks is a collection of daily columns from The Business Network, which airs weekday mornings on CBC Radio One at 5:45 a.m. ET (6:15 a.m. ET in N.L.).
Despite having wrestled inflation to the ground a decade ago, inflation in Canada remains a bit of a worry. Prices in September increased 2.5 per cent above the same month last year. In Alberta and other parts of western Canada, that rate is much higher. Of course, the Bank’s single-minded purpose is to keep price increases at “low, stable and predictable” levels. They target 2 per cent for all-items inflation.
But at the same time, there are a lot of risks to the Canadian economy that may take the bite out of inflation without the Bank having to raise interest rates. Chief among them: a soaring loonie, which has already hit levels well above the $1.03 US mark.
So what’s on the minds at the Bank of Canada? And what is likely to happen next?