Dollar higher as Bank of Canada hints of rate hikes later in year

   Canada column for Sunday, April 22/12

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   THE CANADIAN REPORT

   (c) By Jim Fox

   Canada’s dollar and markets rebounded after the Bank of Canada’s announcement that the days of “cheap” money could be coming to an end.

   A hawkish statement took the markets by surprise with the strong signal the central bank is considering raising interest rates later in the year due to improvements in the global and Canadian economies.

   The bank for now has kept is trendsetting key interest rate at 1 percent where it has been since September 2010 while the prime-lending rate remains at 3 percent.

   Bank Governor Mark Carney has suggested there will be “some modest withdrawal of the present considerable monetary policy stimulus” while keeping inflation in check.

   The announcement boosted the value of the Canadian dollar by almost 1 cent U.S. to $1.01 while stock markets also rose.

   News on Friday that Canada’s annual inflation rate dipped to 1.9 percent last month from 2.6 percent in February, the lowest in18 months, is expected to keep the pressure off the bank from raising rates anytime soon.

   Higher interest rates are seen as a way of limiting runaway consumer debt that Carney said “remains the biggest domestic risk" to the Canadian economy.

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   Canada’s oldest prison, the Kingston Penitentiary, is on death row.

   The federal government said the 177-year-old institution will be closed over the next two years in a cost-cutting move.

   As Canada’s first penitentiary, its towering stone walls conceal the buildings that have housed some of the country’s most notorious inmates.

   Also closing is a mental-health treatment center in the prison and the medium-security Leclerc Institution in Laval, Quebec.

   Public Safety Minister Vic Toews said the 1,000 inmates at the prisons will be moved to other facilities.

   The two institutions are old and “not appropriate” for managing a modern prison population, he said.

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   News in brief:

   - A cooling housing market in Vancouver offset rising prices in Toronto and across Canada as home prices fell nationally in March from a year ago. The Canadian Real Estate Association said the average residential house price in March was $369,677, down 0.5 percent from a year ago. Vancouver’s average price fell 3.1 percent to $761,742. Toronto’s boom in condominiums pushed prices 10.5-percent higher in March to an average $504,117.

   - A “declining marketplace” with fierce online competition prompted Rogers Communications to immediately close its 90 remaining video rental stores across Canada. The company said the closing of 400 Blockbuster stores last year did little to boost its rental business. Rogers’ video operations lost $23 million last year.

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   Facts and figures:

   The Canadian dollar was higher Friday at $1.0075 in U.S. funds while the U.S. greenback returned 99.25 cents Canadian.

   The Bank of Canada’s key interest rate is steady at 1 percent while the prime-lending rate is 3 percent.

   Stock markets are mixed, with the Toronto exchange index up at 12,162 points and the TSX Venture index down at 1,397 points.

   Lotto 6-49: (April 18) 6, 10, 11, 16, 32 and 36; bonus 42. (April 14) 14, 16, 18, 20, 26 and 47; bonus 13. Lotto Max: (April 13) 2, 6, 11, 12, 16, 39 and 45; bonus 3.

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   Regional briefs:

   - The second election in six months is possible in Ontario if opposition parties defeat the minority Liberal government’s budget on Tuesday. The Conservatives are fueling election fever by already nominating candidates and declaring none of its members will endorse the budget. The Liberals need the support of at least two New Democratic politicians to remain in power.

   - Alberta’s fledgling Wildrose right-wing party remains in the lead to win Monday’s provincial election. Polls show the party, led by Danielle Smith, has 41-percent support. That compares with 33 percent for the Premier Alison Redford’s ruling Conservatives with the possibility the party’s 41-year dynasty could end.

   - Pricy Vancouver also has the Guinness World Records’ most-expensive hot dog at $100. DougieDog sells a foot-long bratwurst infused with 100-year-old Louis XIII cognac from a food truck. The Dragon Dog also comes with Kobe beef and is seared in olive and truffle oil with fresh lobster and a secret picante sauce, said owner Dougie Luv. The title was previously held by New York’s Serendipity 3 with a $69 hot dog.

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Jim Fox can be reached at canadareport@hotmail.com