It seems the great ride could soon be over. As inflation continues to move at a rate faster than even the central bank expected, Statistics Canada says the Bank of Canada could lift its interest rates as early as June. Yes, this means it could very well cost more to borrow money. The Bank of Canada is guided by the core rate. Consumer prices climbed 1.6% in February, down from 1.9% in January, but the core rate, which eliminates volatile items such as fuel, rose 2.1% from 2%. Economists had not expected Canada to reach this target until the third-quarter of 2011. Some economist say that Canada's core inflation mark up resulted in the 'Olympic Effect' due to hotels in Vancouver charging exorbitant rates for their rooms. One hotel that normally refers to itself as a discount hotel, was charging $1,200 a night for a suite that usually costs $280. Either way, Canada is moving out of the recovery phase of the recession. This is going to be a huge factor on how aggressive policy makers are going to be. There is speculation that the central bank will begin increasing borrowing rates before the United States. This speculation has played a large factor on the loonie being close to parity with the US dollar. Out of the Group of Seven, Canada may be the first out of Great Britain, France, Japan, Italy and the United States to raise interest rates since the recession began. The US does not show any sign of raising their borrowing rates any time soon as their consumer prices did not show an increase last month, the first time in almost a year. In Asia, the inflation is being beaten back as their country's growth accelerates. The central bank in India announced a rate hike in an attempt to fight against inflation while China posted a 16-month high in its consumer index recently. Canadian retail sales increased by 0.7% in January due mostly to home-improvement products and the government's Home Renovation Tax Credit. Many economists think the banks will raise the rates by 0.25% at a time then re-evaluate, which means the clock is ticking on Canada's record-low rates. If you are one of the many who are unable to take advantage of these low interest rates due to bad credit, you may want to consider alternate means of financing such as car title loans. While interest rates will be higher due to the high risk nature of these loans, doing some research will enable you to find a lender who provides reasonable rates with flexible repayment terms.
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