July 21, 2010

Bank of Canada raises interest rates to 0.75%

CANADA - For the 2nd time since June 1st, Bank of Canada Governor Mark Carney has raised the key overnight lending rate by 0.25%, bringing the total to 0.75%.

This is despite economic worries that many poor Canadians have too much debt and are being swallowed up by higher interest rates, especially from credit cards.

The average Canadian has over $60,000 in personal debt. An 0.25% increase means most Canadians will end up paying approx. $150 more in interest per year.

Who does this benefit? Canada's banking industry, already ripe with billion dollar annual profits.

Raising the interests rates also hurts the mortgage, housing and construction industries which are currently on the verge of the housing bubble being burst. When the bubble bursts Canada will go into a recession similar the American Recession of 2007-2009. Raising interest rates for mortgages too fast could spark a decline in home buyers and cause the housing bubble to implode.

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