A low inflation number is positive for bonds. It is possible that most of the tightening could be done. |
The Liberal Party didn't even recognize the existence of the fiscal imbalance, even though they created it. |
The signal is that if we have good growth in 2006 but no inflation, there is no need to raise rates. I would even say, one more hike (this year), but not necessarily at the next announcement. |
There will have to be some major changes as time passes if the fiscal situation remains the same. |
You have to be positive on 10-year bonds when you expect lower inflation. I don't expect the Bank of Canada to raise rates at its next meeting because inflation is low and going lower. |