On Tuesday, the C.D. Howe Institute, one of Canada's leading public policy think tanks, recommended the Bank of Canada perform several quick and sharp increases to the key interest rate starting in June. The institute suggests the central bank "implement a 50 basis point hike at every six-week meeting starting in July and continuing through until mid-2011." I, along with many Canadians from the finance minister to Maclean's magazine, have voiced concern with the huge debt loads Canadians have taken on laregly due to the run-away housing market and ballooing mortage payments. Interest rates are currently as low as they can go. That's not hyperbole either, the rates are at 0.25% right now--any lower and the banks would be paying you to take out a loan. Interest rates have to go up, they will go up, and they should begin as soon as possible. This would cool the housing markets, slow inflation (which stands at 2% at the bottom of shaky recovery)and set our economy on more sustainable groud. We've tended to use low interest rates for every economic application in recent years. Interest rates were lowered to fuel the economny in boom times, they were lowered to prop up the economy when cracks began to show, they were lowered when the economy tanked and now they've been pushed to rock-bottom levels to help propel a recovery. Talk about a panacea! Low interest rates are not the cure-all for our economic woes. Without action soon these record low interst rates will only lead to damaging inflation-as the recovery really starts to take hold and commodities liek natural gas and oil surge-as well as a further inflation of a housing bubble that's really going to sting when it pops.
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