Higher interest rates could follow big jump in inflation in Canada

   Canada column for Sunday, April 24/11

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   THE CANADIAN REPORT

   By Jim Fox

   Canadians could soon be facing higher interest rates after a sharp increase in the inflation rate propelled by higher gasoline and food prices.

   A spike in the rate last month to 3.3 percent was the biggest single-month inflationary increase since September 2008 and was a setback as Canada had been beating global trends, economists said.

   The Bank of Canada prefers to keep inflation around two percent with anything higher leading to the prospect of raising the key interest rate to cool off the economy.

   The good news in the latest numbers was that "core" inflation was 1.7 percent higher as it excludes volatile items including gasoline but was still almost twice the 0.9 percent rate in February.

   Canada's central bank had predicted inflation would reach 3 percent this spring and then back off.

   The April inflation figures will be known before the central bankers consider an interest-rate increase at its next meeting on May 31.

   The bank "won't be comfortable keeping rates on hold beyond the next meeting if this (higher inflation) is not a fluke," said economist Douglas Porter of BMO Capital Markets.

   There are predictions the key rate will rise to 3.5 percent by next year, up from 1 percent now.

Expensive election may see no change in Canada's government

   Canada column for Sunday, April 17/11

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   THE CANADIAN REPORT

   (c) By Jim Fox

   Canadians are spending $300 million for a federal election on May 2 that might again change nothing.

   With the governing Conservatives firming up their numbers in public opinion polls, the only question might be whether they will finally be able to form a majority government to forestall another election for four or five years.

   This is the fourth election in seven years as minority Conservative governments keep getting voted out of office by the other parties.

   Prime Minister Stephen Harper's platform of restraint and lower taxes to eliminate the federal deficit appears to be working as a Nanos Research poll after the televised leadership debates firmed his Conservatives at 38.7 percent.

Canada's Conservatives campaign on deficit reduction

   THE CANADIAN REPORT

   (c) By Jim Fox

   Restraint and lower taxes to eliminate the federal deficit a year earlier than forecast are hallmarks of the campaign by the Conservatives seeking re-election on May 2.

   Prime Minister Stephen Harper said his government is intent on reducing spending by $11 billion through to 2014-2015 to wipe out the deficit.

   That would then allow the government to pay for programs to reduce taxes for families and businesses.

   Such aggressive spending cuts would require finding federal programs that could be eliminated and not replacing government workers who leave their jobs.

Canadian political leaders debate about debates

   THE CANADIAN REPORT

   (c) By Jim Fox

   Debates over debates are overshadowing promises, promises as Canada's political leaders campaign for the May 2 federal election.

   Upset at being shut out of the televised leaders' debates, Green Party Leader Elizabeth May is asking the court to force broadcasters to let her in.

   And, it now appears there won't be a one-on-one showdown between the two frontrunners -- Conservative Prime Minister Stephen Harper and Liberal Leader Michael Ignatieff.