Tuesday, November 20, 2007


Following this morning's CPI data, I guess there's a little room for the central bank to lower rates. Were they so inclined.

What's bothering me though is that I'm seeing a lot of press constructing an argument something like this: 'Well, the core was below 2%, so that gives the Bank of Canada room to open the throttle.' While the target is 2%, that's not the floor - we try for between 1 and 3%. I'd like to take this chance to revise that target down to between 1 and 2%, but I am well aware it won't happen.

Those interested can also see the effects of the dollar. Fresh produce was down 14.6% y/y, and somewhere in the vicinity of 5% in October alone - note that in Newfoundland we're not seeing any of this decrease, according to relatives that do more grocery shopping than I. Women's clothing was down 2.3% in October. Categories that predominately consist of imports.

Peculiarly enough, the release also shows the booming of the St. John's housing market. Property taxes were up 8.8% annually, on the basis of lower rates and much higher assessments. At least I'd bet it's the capital; I certainly can't think of any reason why people would suddenly bidding up the market in Heart's Content/Delight/Desire/End.

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