Canadian Economy

It’s been interesting to read the paper articles regarding what the Canadian government should do during these interesting economic times. While the Canadian economy has been doing relatively well, it is not totally insulated from the volatility of the world economic and market conditions. The condition was neatly reflected last week when, on the same day, two different papers had different opinions with respect to what the Bank of Canada should do. The Toronto Star opined that the Bank of Canada should raising interest rates in light of the fact that inflation increased by 1.8% in the month of April. On the other hand, the Globe and Mail opined that, due to the Greek debt crisis and its effect on the rest of Europe, the “chances of an interest rate hike has dramatically decreased.” I’m guessing that the world stock markets have essentially delivered their verdicts in the past week, reflecting a lack of confidence in the Euro currency and financial and economic conditions in Europe. As the papers have pointed out, the Chinese and the North Americans have a fair percentage of exports going to Europe. A slowdown in exports naturally will have an effect on world economic conditions. Call me a pessimist but I think that the current recession is far from over. With regard to interest rate hikes, we shall find out on June 1st as that is when the Bank of Canada will decide whether to raise the interest rate or not.