Every week we bring you the world’s biggest travel, currency, and business stories. This week: the Bank of Canada raises interest rates and the Canadian dollar soars but the housing industry and IMF have concerns; AirBnB gets fined; EasyJet expands.
Bank of Canada governor Stephen Poloz announced that the bank was raising its benchmark interest rate from 0.5% to 0.75%. Poloz and further bank statements expressed strong confidence in the Canadian economy. In response the loonie jumped almost a cent in one day. On Tuesday the loonie sat at an average of 77.40 US. A few hours after Wednesday’s announcement it had reached 78.70 cents.
Read more: Canadian dollar rising
Higher interest rates in Canada are good news for the loonie but some have expressed concern about the impact on housing. A higher benchmark rate means mortgages and loans will cost more. That could mean a slowdown in the housing market and lower prices. Many believe the market is well overdo for a cooldown, but others worry about the effect it could have on the mortgage and construction industries. No negative reaction yet, but watch these numbers closely for an indication of whether the bank will raise rates again come the fall.
IMF Warns the Bank of Canada
Despite Canada’s strengthening economy the IMF (International Monetary Fund) has warned that the future remains uncertain. Housing imbalances and ongoing trade disputes with the US could impede growth. Toronto and Vancouver have red hot markets that border on bubbles – prices have more than doubled since 2009. Meanwhile housing prices in the rest of the country remain lukewarm. The US has just slapped Canada with a softwood lumber tariff and Trump’s administration have continually targeted NAFTA. No official renegotiation of NAFTA has so far been announced.
The IMF also warned that considering Canada’s inflation rate remains below 2% the rate rise may be premature. The international body said, “While the output gap has started to close, monetary policy should stay accommodative until signs of durable growth and higher inflation emerge.”
A California woman was fined $5,000 and sentenced to take Asian-American courses after discriminating against a prospective Asian guest. The woman responded to the woman’s request by sending a message that read, “One word says it all. Asian.” There have been other complaints made to the company that people were being discriminated against.
EasyJet to Austria
EasyJet is setting up a new company based in Austria to protect itself against potential fallout from Brexit. The new airline will be called “EasyJet Europe.” The company is in the latter stages of the process for registration. In order to fly between EU countries the company needs to have an air operator certificate issued in an EU country.
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