{"id":15321,"date":"2015-12-16T07:39:08","date_gmt":"2015-12-16T12:39:08","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15321"},"modified":"2015-12-16T07:39:08","modified_gmt":"2015-12-16T12:39:08","slug":"u-s-interest-rate-hike-will-be-tough-medicine-for-indebted-canada","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15321","title":{"rendered":"U.S. interest rate hike will be tough medicine for indebted Canada"},"content":{"rendered":"
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U.S. interest rate hike will be tough medicine for indebted Canada<\/a><\/h3>\n<\/div>\n

America has had its housing market ‘correction,’ ours is yet to come<\/strong><\/p>\n

\"Federal<\/p>\n

Federal Reserve Chair Janet Yellen at the Economics Club of Washington earlier this month. She is widely expected to raise the Feds main interest rate today, for the first time in nine years. (Susan Walsh\/Associated Press)<\/p>\n

Let’s look at the unfortunate facts for a moment.<\/p>\n

The U.S. Federal Reserve appears ready to raise interest rates slightly today, because it believes an American recovery is well underway. The U.S. economy is now at what economists would call full employment \u2014\u00a0about five per cent.<\/p>\n

Good for them. An American recovery cannot be anything but good for Canada.<\/p>\n

And yet.<\/p>\n

The Canadian economy is weak enough that Bank of Canada governor Stephen Poloz is now actually talking about the possibility of going the other way, all the way to negative rates, which means you’d be better off stuffing cash into a mattress.<\/p>\n

That would penalize savers and push people to take risks in search of return. (It also means an even lower Canadian dollar; what a difference a few years make.)<\/p>\n