Speculation Rises for Bank of Canada Rate Hike

The fourth quarter of 2010 proved to be a strong revival for the Canadian economy and has observers betting that the Bank of Canada will resume interest rate hikes sooner than previously expected. Overall growth expanded by an annualized rate of 3.3 percent and Stats Canada even revised its Q3 growth rate higher to 1.8 percent from 1.0 percent.

An increase in exports is being heralded as the primary driver and this helped close Canada’s trade deficit from a record C$16.98 billion in Q4 2009 to C$11.05 in Q4 2010.

“It’s a stunning gain in exports,” said Sal Guatieri, senior economist at BMO Capital Markets. “It’s a fairly solid report and (there’s) plenty of momentum heading into the new year, given the strong gain in December.”

Source: Reuters

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