The long-awaited liftoff is here: the U.S. Federal Reserve has announced they are raising the Federal Funds Target Rate to 0.5 per cent. It is the first time in seven years the Fed has increased their trend-setting interest rate, which they cut to 0 per cent on December 16, 2008. Markets had widely anticipated the move, with 81 per cent calling for a hike today. As the U.S. is the largest economy in the world, any change it makes reverberates through the rest of the globe, impacting markets and even the cost of borrowing for other countries.
The worst kept secret regarding the economy was made official today -- Canada is in a recession. There is nothing technical about it; the definition of a recession is relatively straightforward: two consecutive quarters with negative economic growth. The fact that this definition might not be convenient for a sitting government's, which holds itself out as brilliant economic managers, political fortunes is irrelevant. By any objective standard, the Canadian economy is under-performing.