Canada Raises Interest Rates

The Bank of Canada raised interest rates by a quarter-point this week to 0.5%. It has become the first central bank in the Group of Seven (G7) rich industrial countries to tighten policy since the financial meltdown of 2008-2009, CNN Money reports. While Canada’s economy expanded at a 6.1% clip in the first quarter, paced by rising consumer spending and housing prices, conditions remain decidedly mixed elsewhere.

“The required rebalancing of global growth has not yet materialized,” the Bank of Canada said. “In most advanced economies, the recovery remains heavily dependent on monetary and fiscal stimulus.”

A weak and uneven global recovery will mean extra care in removing government support, the bank said. So don’t expect the Federal Reserve, Bank of Japan, or European Central Bank to rush to follow suit. Many are forecasting that the Fed won’t raise its fed funds rate from the current range of 0% to 0.25% till August 2011.