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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.
Financial markets are likely in for a bumpy ride in the coming years -- what we now see is perhaps a foretaste. Hiding from the ups and downs isn't likely an option. Looking for this period's manifold opportunities could actually be exciting.
Clearly it is a worry that five years beyond the crisis, price growth is as tame as it is. Worse yet, in many cases, recent monthly inflation is getting thinner.
We don't know for sure who will be tapped for the job of Governor of the Bank of Canada. What we do know is that the individual will be a Canadian. No other nationalities were invited to apply. But, in 2013, does such a citizenship restriction even make any sense? Or is it just another manifestation of good, old-fashioned Canadian parochialism?
Depending on one's perspective, 2011 will be viewed as disappointing, bordering on terrible; or, it will be looked back on as a year where we should be thankful. Investors were brought face to face (finally) with the reality that solving the 2007-08 housing and credit crisis merely kicked the can down the road to the next bus stop; that being government debt.
UPDATE: North American stock markets racked up strong gains after the Bank of Canada and other major central banks announced moves to provide added support to the global financial system.The S&P/TSX c...