... relative stances of their monetary policies. A risk factor is also factored in. The result is that Canadian interest rates can be either higher or lower than U.S. rates but are never fully independent." The Bank of Canada joined the upward cycle on September 8, 2004, increasing its overnight loan rate by 0.25 percentage points to 2.25 per cent. The bank added another quarter of a percentage point to the rate on October 19 and made it clear that as the economy continued to improve, there was only one way - rates could go up. However, Canadian dollar started to rise rapidly and growth slowed in the second half of 2004 and that got the attention of the Bank of Canada. It held off on further rate increases - until September 7, 2005, when the rate went up another quarter of a percentage point to 2.75 per cent. When the ...

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