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19 April 2008

PRIME could be falling by up to .75% between April 22 and June 10

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Canada Inflation Falls to 14-Month Low on Car Prices (Update3)

By Theophilos Argitis

April 17 (Bloomberg) -- Canada's annual inflation rate was the slowest since January 2007 last month as prices for automobiles dropped, giving the central bank room to lower interest rates for a fourth straight meeting next week.

Inflation stayed below the Bank of Canada's target as consumer prices rose


<http://www.bloomberg.com/apps/quote?ticker=CACPIYOY%3AIND> 1.4 percent in
March, slower than the 1.8 percent pace the month before, Statistics Canada

said <http://www.statcan.ca/Daily/English/080417/d080417a.htm> today in Ottawa.

Economists forecast a 1.5 percent inflation rate, the median of 24 estimates.

Slower inflation has given the Bank of Canada flexibility to lower borrowing costs in the face of a possible recession in the U.S., Canada's main export market, even as other nations see food and energy costs rising. The world's eighth-biggest economy is benefiting from a strong currency, making imports cheaper.

``There are no inflationary pressures in Canada, despite all the great deal of attention to commodity prices and energy prices,'' said Carlos Leitao


<http://search.bloomberg.com/search?q=Carlos+Leitao&site=wnews&client=wnews&
proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields
=wnnis&sort=date:D:S:d1> ,

chief economist at Laurentian Bank Securities Inc. in Montreal. ``That guarantees we are going to have a 50 basis point'' reduction next week.

Annual consumer price inflation in the U.S. was 4 percent in March, almost triple the pace in Canada, on energy costs, the Labor Department said yesterday in Washington. Crude oil today climbed to $115.54 a barrel in New York, the highest since futures began trading in 1983.

The Bank of Canada last month reduced the benchmark rate by 50 basis points to 3.5 percent and economists expect it will cut another 75 basis points over decisions on April 22 and June 10.

Thanks,

David Kendall
Senior Mortgage Consultant

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