The Organization for Economic Co-operation and Development is urging the Bank of Canada to move in the direction it seems to want to go anyway. The OECD wants the central bank to start pushing up interest rates in the fall and keep going through 2013. The group says 2.25% for the overnight rate would be a good target. By the OECD’s thinking that remains low enough not to hamper economic growth, while being high enough to discourage home buyers from jumping into an over-priced, over-heated market. Even though the increased rate would lead to a record spread relative to the U.S., the OECD believes Canada’s economy is robust enough to survive the inevitable upward pressure on the Loonie.
The same call a year ago was ignored.
In the U.S., sales of existing homes climbed in April, the first increase in three months. Re-sales rose at an annualized rate of 3.4% according to the National Association of Realtors. The median price of an existing home in the U.S. was up 10% Y/Y in April.
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