The strong-ish November GDP number has revived the debate about when the Bank of Canada will start increasing its target for the overnight rate. On one hand, we have this:
Recovery points to summer rate hike: With the North American economy growing significantly faster than expected at the end of 2009, and with mounting evidence that Canada is pulling clear of recession, economists are increasingly of the view that central bank Governor Mark Carney will pull the trigger on an interest-rate hike this summer, rather than wait until later in the year.
David Rosenberg has staked out the contrarian territory:
Interest hike this summer?: The history of the Bank of Canada is such that - outside of when it had to defend the Canadian dollar - it typically does not embark on its tightening phase until the output gap is close to closing... If such a strategy is replicated this time around - and the cause for being on pause longer in the context of a historic deleveraging cycle is certainly quite strong - then the very earliest the bank will move is the second quarter of 2011.