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Canada's interest rate rises as economy grows

Canada has the distinction of being the first G-7 industrialized nation to increase interest rates, as the economy rebounds from the recession.

The Bank of Canada raised its trendsetting key interest rate by 0.25 percent to 0.5 percent, the first hike in three years.

In making the increase, the bank noted "considerable uncertainty" in the global economic recovery, indicating this wouldn't be the start of further aggressive rate hikes.

Strong consumer spending and a robust housing market helped Canada's economy expand by 6.1 percent in the first quarter, more than expected.

Anticipation of higher interest rates pushed Canada's dollar to parity with U.S. currency last month, the first time since 2008.

The dollar has since dropped back to around 95 cents U.S. on the realization that Canada's central bank likely won't soon continue with a series of increases.

Concern over inflationary pressures as the economy recovers prompted the Organization for Economic Cooperation and Development to urge the bank to raise rates from the historic low.

Toyota Canada says work is 88% complete

Toyota Canada executives say repairs to vehicles as part of the Japanese automaker's global recall are 88 percent complete.

The executives gave an updated report to a Canadian government committee examining the automaker's response to safety issues.

The committee is discussing whether Toyota responded timely and appropriately when safety concerns became known.

Stephen Beatty, Toyota Canada managing director, said reports of sticking gas pedals were first made in Canada late last fall.

"We then undertook the most comprehensive and rapid roll-out of a recall campaign in our history," he said.

News in brief

• The ballooning costs of security, estimated at $1.1 billion, for this month's Group of Eight and Group of 20 summits are a concern for Ontario Premier Dalton McGuinty. Ways need to be found to do it for less or it could jeopardize future summits, he said. Ontario is hosting the gatherings of world and financial leaders in Huntsville on June 25 and 26 for the G-8, and in Toronto on June 26 and 27 for the G-20.

• GM Canada will secure another 400 Canadian jobs with a new transmission production line in St. Catharines, Ontario. The plant will produce more fuel-efficient, six-speed transmissions starting in 2012. It was earlier announced that GM will build its "next generation" engines at the plant, keeping the jobs of an additional 400 workers.

• The Canadian woman who the federal government returned to Canada in 2008 from a Mexican prison is again free after spending some time in an Ontario jail. Brenda Martin was convicted in Mexico for being involved in a money-laundering scheme with a former boss. She was ordered to jail in Kitchener, Ontario, in January for public intoxication, a violation of her parole conditions.

Facts and figures

There was strong job growth in Canada last month with 24,700 positions created for the fifth consecutive monthly increase. The jobless rate was steady at 8.1 percent.

The Canadian dollar traded for 94.30 cents U.S. on Friday, while the U.S. greenback was worth $1.0605 Canadian, before bank exchange fees.

The Bank of Canada's key interest rate advanced to 0.5 percent, while the prime lending rate was up at 2.5 percent.

Stock markets are lower, with the Toronto exchange index at 11,575 points and the TSX Venture Exchange at 1,460 points.

Lotto 6-49: (Wednesday) 15, 19, 30, 31, 34 and 37; bonus 7. (May 29) 18, 32, 40, 41, 47 and 49; bonus 7. Lotto Max: (May 28) 11, 18, 23, 24, 27, 28 and 39; bonus 1.

Regional briefs

• The Ontario Lottery and Gaming Corp. is making changes to employee rewards and other issues after an investigation into spending practices. Auditor General Jim McCarter found that the corporation spent $3.6 million in three years on hospitality for its employees, often without proper receipts. President and CEO Kelly McDougald was dismissed last year and received $750,000 after suing the province.

• Canadian art masterpieces are selling for record prices despite tough economic times. In Vancouver, Group of Seven artist Lawren Harris' Bylot Island I, an oil-on-canvas arctic landscape painted in the early 1930s, sold for $2.8 million. Sketches by Harris sold for $300,000 in Toronto, where the group's Arthur Lismer's Bon Echo Rock sold for $778,750, double what was expected.

• Had a lottery ticket not been voided, it would have won $30 million tax free in the May 21 Lotto Max draw. A woman asked for a $12 set of numbers at the Corner Store in St. John's, Newfoundland, but the clerk made an error and the ticket produced cost $27. The customer refused the ticket and it was later learned that it contained the jackpot winning numbers.

Jim Fox can be reached at canadareport@hotmail.com.

Canada's interest rate rises as economy grows 06/05/10 [Last modified: Monday, November 7, 2011 5:08pm]
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