MONTREAL (Reuters) – Recent weak economic data in Canada was expected and does not necessarily mean the central bank will change its view that eventual interest rate hikes are needed, Bank of Canada Governor Mark Carney said on Thursday.
Canada recovered more quickly from the global recession than the United States or Europe, prompting the central bank to hint that it may have to raise interest rates.
But the expansion appears to be slowing. The economy shrank in August for the first time in six months, housing starts slowed in September, the job market stalled in October and exports remain sluggish.
My comment to this is,
If Canada is continuing to outperform the US and the EU economically it is is because Canada is a resource based economy, while the US and Europe are not. This means that Canada has debt-free money coming into Canada which sustains our economic health, whereas the US and Europa have to borrow money from private banks, which bear interest payments, to keep their economies afloat. Debt-free money is always a positive buoy to the economy, but by its nature debt money will always have the negative of interest draining off.
If Canada’s economy is beginning to become sluggish it is because even China’s economy is slowing, therefore China’s purchases of Canadian resources are down, and the debt-free dollars therefore slow down also.