Business Calendar: All eyes on the U.S. Federal Reserve
Will interest rates goes up for the 1st time in more than nine years?
Markets around the world are watching the U.S. Federal Reserve this week to see if it will do something that it hasn't done since 2006.
Raise interest rates.
It has been nearly a decade since the U.S. central bank felt the economy was strong enough to withstand an increase in the Federal Funds rate.
In June 2006, the Fed raised its overnight lending rate by a quarter point to 5.25 per cent, to curb inflation and a hot economy. It was the 17th rate hike in a row and market watchers expected another hike later that summer.
However, housing markets had already peaked at that point, and it wouldn't be long before the central bank started a series rate cuts to try to stave off economic collapse in the U.S. Rates dropped to nearly zero by 2008 and that's where they've stayed ever since.
The U.S. economic recovery has been choppy, but now seems to be gaining steam. However, economists say there are problems outside the United States, coming from China and Europe
If interest rates do go up in the U.S. this week we will see more weakness in the loonie, but an increase in U.S. rates also signifies that the Federal Reserve sees the U.S. economic recovery as resilient. A resilient U.S. is good for the Canadian economy.
Economists are evenly split on whether rates will move higher this week or if the Fed will wait until its next meeting in December. We'll know for certain on Thursday.