http://www.vancouversun.com/business/Inflation+stronger+than+expected+says+Bank+Canada+Carney/2721785/story.html
Summary:
Basically this articles talks about how the Bank of Canada governor Mark Carney is trying to keep the bank rates at its current percentage. They are also trying to control and maintain the inflation rate at 2%. The Bank of Canada will be renewing their inflation forecast in April when it release its most recent monetary policy report. Many different representatives from the banks like TD said the Bank of Canada may have a June hike, and BMO said they are looking forward to something happening in July, and the chances are increasing.
Connection:
This article is a perfect connection with what we learned about inflation. In a healthy economy, we should be having our bank rates from 1% - 3% which is what the Bank of Canada is trying to do, by maintaining a 2% inflation rate. Also, they mentioned about the Winter Olympics in Vancouver having a higher than expected level of economic activity which opened many jobs for the employment rate to increase. There were a lot of business activity considering the amount of tourist that came to buy many of the Olympic mascot products.
Personal Reflection:
I think the Bank of Canada is doing the right job of keeping the inflation rate at a 2%. It wouldn't be a healthy economy if it was lower than 1% or higher than 3%. With the Olympics that were in Vancouver, it helped open up many jobs before and after it. Also, it helped with Canada recovering from the recession as many tourist have spent money. There might be investors that came to the Olympics and thought that Vancouver in general is a good place to invest in.
Thursday, April 8, 2010
Tuesday, March 2, 2010
Chapter 7 - Money and the Canadian Banking System
http://www.vancouversun.com/business/Canadian+dollar+spike+likely+short+lived+analyst/2628852/story.html
Summary:
The CAD spiked as oppose to other currencies. The value of CAD against the USD has increased. The reason for that is because USA printed too much money, lowering their value while other currencies like CAD did not. The rise in value of CAD wouldn’t last very long because the Bank of Canada may increase interest rates on Tuesday. Whenever there is an increase in interest rates, the government is trying to remove money from the money supply. By doing that, it will be more difficult to borrow and lend money. Businesses that would need the money would slow down due to this problem and so will the economy because there isn’t money being spent enough. Signaling an increase in interest rates would cause people not to react well to the CAD because they would want the Bank of Canada to lend and borrow money freely.
Connections:
Signaling an increase in interest rates would cause people not to react well to the CAD because they would want the Bank of Canada to lend and borrow money freely. By lending and borrowing money freely, the Bank of Canada will have a shortage on money supply which will cause them to print out more money. If they print out more money, they are going to have the values of CAD decrease. The Bank of Canada would need the rates to help Canadians in the long run rather than right now.
Personal Reflection:
I agree with the decision with the Bank of Canada, people wouldn't want to see the interest rates going up again which will cause them to have tightened credit. Tightened credit will slow the economy down. So to help the economy they are going to have to adjust their interest rates and control inflation rates, letting Canadians spend more which will stimulate the economy. Sooner or later interest has to go up, they cannot have interest rates sitting near 0.
Summary:
The CAD spiked as oppose to other currencies. The value of CAD against the USD has increased. The reason for that is because USA printed too much money, lowering their value while other currencies like CAD did not. The rise in value of CAD wouldn’t last very long because the Bank of Canada may increase interest rates on Tuesday. Whenever there is an increase in interest rates, the government is trying to remove money from the money supply. By doing that, it will be more difficult to borrow and lend money. Businesses that would need the money would slow down due to this problem and so will the economy because there isn’t money being spent enough. Signaling an increase in interest rates would cause people not to react well to the CAD because they would want the Bank of Canada to lend and borrow money freely.
Connections:
Signaling an increase in interest rates would cause people not to react well to the CAD because they would want the Bank of Canada to lend and borrow money freely. By lending and borrowing money freely, the Bank of Canada will have a shortage on money supply which will cause them to print out more money. If they print out more money, they are going to have the values of CAD decrease. The Bank of Canada would need the rates to help Canadians in the long run rather than right now.
Personal Reflection:
I agree with the decision with the Bank of Canada, people wouldn't want to see the interest rates going up again which will cause them to have tightened credit. Tightened credit will slow the economy down. So to help the economy they are going to have to adjust their interest rates and control inflation rates, letting Canadians spend more which will stimulate the economy. Sooner or later interest has to go up, they cannot have interest rates sitting near 0.
Thursday, January 21, 2010
Chapter 3 Article
http://www.reuters.com/article/idUSN2014037620100120?type=usDollarRpt
Summary:
This article is about how the Bank of Canada uses the monetary policy to keep their interest rates low. The monetary policy is the adjustment of interest rates. By keeping their interest rates low, it allows banks to lend out money to businesses more freely and easily, but it will affect the money supply. Banks lending out money will help the economy move along. They also talk about inflation rates and how it is being used with the interest rates. Inflation is the increase in the general level of prices. Keeping the interest low will also have a negative impact on the economy. Since lending out money is easier, then money supply would lower. If the government decides to print more money for funding then it would result in a decrease in the Canadian dollars. With interest rates being low and money being lent freely, this has caused a housing bubble in Canada. The government is worried that the housing bubble would be out of control and cause major financial problems just like it did in the United States a few years ago.
Connections:
The article is a perfect example of how the government is involved in helping out the Canadian economy. The government is trying to adjust the interest rates and control inflation so that the economy would recover. They are also trying to promote people to spend more which will make cash flow easier. At the same time of adjusting and controlling, the government has to make sure that the money supply would not decrease by a lot.
Reflection:
I think the Bank of Canada is doing the right job by making the interest rates low and trying to control inflation at the same time. If they didn’t do that then we would be like the United States and have an even worse economy. The Canadian dollar is being maintained so that it is not decreasing as much as the American dollars right now. As long as the Canadian government keeps doing the same thing then the house prices would increase meaning people are spending more so we can get a better cash flow.
Summary:
This article is about how the Bank of Canada uses the monetary policy to keep their interest rates low. The monetary policy is the adjustment of interest rates. By keeping their interest rates low, it allows banks to lend out money to businesses more freely and easily, but it will affect the money supply. Banks lending out money will help the economy move along. They also talk about inflation rates and how it is being used with the interest rates. Inflation is the increase in the general level of prices. Keeping the interest low will also have a negative impact on the economy. Since lending out money is easier, then money supply would lower. If the government decides to print more money for funding then it would result in a decrease in the Canadian dollars. With interest rates being low and money being lent freely, this has caused a housing bubble in Canada. The government is worried that the housing bubble would be out of control and cause major financial problems just like it did in the United States a few years ago.
Connections:
The article is a perfect example of how the government is involved in helping out the Canadian economy. The government is trying to adjust the interest rates and control inflation so that the economy would recover. They are also trying to promote people to spend more which will make cash flow easier. At the same time of adjusting and controlling, the government has to make sure that the money supply would not decrease by a lot.
Reflection:
I think the Bank of Canada is doing the right job by making the interest rates low and trying to control inflation at the same time. If they didn’t do that then we would be like the United States and have an even worse economy. The Canadian dollar is being maintained so that it is not decreasing as much as the American dollars right now. As long as the Canadian government keeps doing the same thing then the house prices would increase meaning people are spending more so we can get a better cash flow.
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