Wednesday, January 25, 2006
Canadian loans rate rises 0.25 to 3.5 per cent
The Bank of Canada has announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 3 1/2 per cent. The operating band for the overnight rate is correspondingly increased, and the Bank Rate is now 3 3/4 per cent.
Information received since the last interest rate announcement on 6 December indicates that the Canadian and global economies are evolving essentially in line with the Bank's expectations as set out in the October Monetary Policy Report (MPR).
The Canadian economy continues to adjust to global developments and to the associated changes in relative prices. CPI inflation, at 2.3 per cent in the fourth quarter of 2005, was lower than expected primarily because of lower gasoline prices. As anticipated, core inflation remained stable at 1.6 per cent. The level of economic activity at year end was close to expectations.
The outlook for growth and inflation in Canada is similar to that in the October MPR. The Bank continues to judge that the Canadian economy is operating at its production capacity and will grow roughly in line with production potential through 2007. CPI and core inflation should return to the 2 per cent target by the first half of 2007.
Risks to the Bank's projection remain balanced for 2006 and tilted to the downside through 2007 and beyond. Further details of the Bank's outlook for output and inflation will be discussed in the Monetary Policy Report Update, to be released on 26 January 2006.
In line with the Bank's base-case projection and current assessment of risks, some modest further increase in the policy interest rate would be required to keep aggregate supply and demand in balance and inflation on target over the medium term.
Information received since the last interest rate announcement on 6 December indicates that the Canadian and global economies are evolving essentially in line with the Bank's expectations as set out in the October Monetary Policy Report (MPR).
The Canadian economy continues to adjust to global developments and to the associated changes in relative prices. CPI inflation, at 2.3 per cent in the fourth quarter of 2005, was lower than expected primarily because of lower gasoline prices. As anticipated, core inflation remained stable at 1.6 per cent. The level of economic activity at year end was close to expectations.
The outlook for growth and inflation in Canada is similar to that in the October MPR. The Bank continues to judge that the Canadian economy is operating at its production capacity and will grow roughly in line with production potential through 2007. CPI and core inflation should return to the 2 per cent target by the first half of 2007.
Risks to the Bank's projection remain balanced for 2006 and tilted to the downside through 2007 and beyond. Further details of the Bank's outlook for output and inflation will be discussed in the Monetary Policy Report Update, to be released on 26 January 2006.
In line with the Bank's base-case projection and current assessment of risks, some modest further increase in the policy interest rate would be required to keep aggregate supply and demand in balance and inflation on target over the medium term.
# posted by Dr Search- Principal Consultant at the Search Clinic @ 12:57 PM 0 comments
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Monday, January 23, 2006
Swedish loans rate raised by 0.25 to 1.75 points
At its meeting on 19 January, the Executive Board of Sweden's Riksbank decided to raise the repo rate from 1.5 per cent to 1.75 per cent. This decision is based on the picture of inflation prospects presented in the Riksbank’s Inflation Report in December and the new information on economic developments received since then.
The assessment in the December Inflation Report was that international growth this year and during the coming years would be good but would decrease slightly. The new information received since then indicates that developments will be slightly stronger than expected.
The assessment for Sweden was that growth would increase this year and then slow down somewhat. New statistics indicate that GDP growth was slightly stronger at the end of 2004 and beginning of 2005 than was previously estimated. Several economic indicators also point to somewhat stronger growth than expected in the future. There may thus be justification for some upward revision of the forecasts for GDP growth in 2005 and 2006.
The situation in the Swedish labour market appears to have brightened somewhat. The number of persons employed is increasing and the number of new job vacancies has continued to rise. On the other hand, the number of hours worked has shown surprisingly weak development and productivity growth in the business sector has therefore been stronger than expected. This indicates that cost pressure will be dampened, despite stronger production growth.
In December, CPI and UND1X inflation were 0.9 per cent and 1.2 per cent respectively, which was in line with the forecast in the Inflation Report. The assessment in December was that inflation would gradually rise and approach the target of 2 per cent as capacity utilisation increased. This forecast assumed that gradual increases in the repo rate would begin early in 2006.
New information points to slightly stronger growth in Sweden and abroad. The assessment is that inflation will rise in line with the earlier forecast. Given the information currently available, an increase in the repo rate, approximately in line with market expectations over the past weeks, is thus reasonable. As before, there is also reason to observe that household indebtedness and house prices are continuing to rise rapidly. Against this background, the Executive Board decided to raise the repo rate by 0.25 percentage points at yesterday’s meeting.
The future stance of monetary policy will as usual depend on new information regarding economic developments in Sweden and abroad, and the effects these developments may have on Swedish inflation prospects.
The minutes of the Executive Board's monetary policy discussion from yesterday's meeting will be published on 2 February 2006. The interest rate decision will apply from Wednesday, 25 January.
The assessment in the December Inflation Report was that international growth this year and during the coming years would be good but would decrease slightly. The new information received since then indicates that developments will be slightly stronger than expected.
The assessment for Sweden was that growth would increase this year and then slow down somewhat. New statistics indicate that GDP growth was slightly stronger at the end of 2004 and beginning of 2005 than was previously estimated. Several economic indicators also point to somewhat stronger growth than expected in the future. There may thus be justification for some upward revision of the forecasts for GDP growth in 2005 and 2006.
The situation in the Swedish labour market appears to have brightened somewhat. The number of persons employed is increasing and the number of new job vacancies has continued to rise. On the other hand, the number of hours worked has shown surprisingly weak development and productivity growth in the business sector has therefore been stronger than expected. This indicates that cost pressure will be dampened, despite stronger production growth.
In December, CPI and UND1X inflation were 0.9 per cent and 1.2 per cent respectively, which was in line with the forecast in the Inflation Report. The assessment in December was that inflation would gradually rise and approach the target of 2 per cent as capacity utilisation increased. This forecast assumed that gradual increases in the repo rate would begin early in 2006.
New information points to slightly stronger growth in Sweden and abroad. The assessment is that inflation will rise in line with the earlier forecast. Given the information currently available, an increase in the repo rate, approximately in line with market expectations over the past weeks, is thus reasonable. As before, there is also reason to observe that household indebtedness and house prices are continuing to rise rapidly. Against this background, the Executive Board decided to raise the repo rate by 0.25 percentage points at yesterday’s meeting.
The future stance of monetary policy will as usual depend on new information regarding economic developments in Sweden and abroad, and the effects these developments may have on Swedish inflation prospects.
The minutes of the Executive Board's monetary policy discussion from yesterday's meeting will be published on 2 February 2006. The interest rate decision will apply from Wednesday, 25 January.
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:32 AM 0 comments
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