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Bank of Canada raises rates!

Colour me pink, I wrote a few days ago that there are no barriers to central banks tightening considering the total absence of inflation (wages) where as asset prices are into the stratosphere.  Well this morning the bank of Canada raised rates by 0.25% --

BOC statement reveals that according to [Steven] Poloz [Governor of the BoC], "removal of some of the considerable monetary policy stimulus in place is warranted" given stronger than expected economic performance while adding that "future monetary policy decisions are not predetermined" and will be guided by economic data and financial-market developments as they "inform the outlook for inflation."

The short term impact is that the Canadian dollar rose by 3c within a few minutes of the announcement.  The market was of the view that the CAD was a one way sure bet towards weakness. I still think that the trend is weakness (for the CAD) it could be that they are just the first to move (not unheard).  German elections are in two weeks -- maybe the ECB will wait until after the election -- but the trend is up, the question now is the FEDS and the ECB when will they move?





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