That is the job of any Central banker in all developing countries.  Let’s be specific, The bank of Canada governor Mark Carney has made his point, the question is will he stick to it? Last week he was faced with a difficult decision to raise rates, or leave them where they are, some would argue he could have dropped them too, but that is way out there.Stagflation right now is considerably troubling for the Canadian economy, if he gets this wrong this could really hurt.  If he raises rates to curb inflation that the bank itself has projected could hit 4% by early 2009, then the already faltering economy will fall harder.  Consider this, the bank is projecting the economy in Canada to increase by a mere 1% in 2008, when you think of the boom in Alberta and Saskatchewan, and to a lesser extent in Newfoundland, and we still nationally only grow by 1% that would mean the rest of the country is experiencing some real difficult times.  So what if they decide that this is a more pressing issue and lower rates to spur on economic prosperity  as many of the premiers asked him to do this past friday?  Well, with inflation out of the bag and NOT at least somewhat under control you can be slammed into a painful and prolonged recession, think of the early 80’s.So, what are they to do then?  Exactly what they are doing, wait and see, but keep a laser focus on lean towards keeping inflation under control. Sorry Ontario and Quebec, but there will not be and should not be any more rate cuts, inflation is an ugly animal.

That is the job of any Central banker in all developing countries.  Let’s be specific, The bank of Canada governor Mark Carney has made his point, the question is will he stick to it? Last week he was faced with a difficult decision to raise rates, or leave them where they are, some would argue he could have dropped them too, but that is way out there.Stagflation right now is considerably troubling for the Canadian economy, if he gets this wrong this could really hurt.  If he raises rates to curb inflation that the bank itself has projected could hit 4% by early 2009, then the already faltering economy will fall harder.  Consider this, the bank is projecting the economy in Canada to increase by a mere 1% in 2008, when you think of the boom in Alberta and Saskatchewan, and to a lesser extent in Newfoundland, and we still nationally only grow by 1% that would mean the rest of the country is experiencing some real difficult times.  So what if they decide that this is a more pressing issue and lower rates to spur on economic prosperity  as many of the premiers asked him to do this past friday?  Well, with inflation out of the bag and NOT at least somewhat under control you can be slammed into a painful and prolonged recession, think of the early 80’s.So, what are they to do then?  Exactly what they are doing, wait and see, but keep a laser focus on lean towards keeping inflation under control. Sorry Ontario and Quebec, but there will not be and should not be any more rate cuts, inflation is an ugly animal.