Paul Ferley Quotations

Bottom line is it's not flagging any inflation pressures, at least on a core basis.

Recent comments by Fed officials on indications that the U.S. economy had a fair bit of momentum going into the natural disaster seems to have resulted in the consensus of the Fed continuing to hike rates,

The numbers still suggest growth in the third quarter of about 3 percent, so the economy continues to expand at fairly close to long-term average rate,

This statement did imply a slightly less aggressive tone relative to its previous statement.

Housing prices nationally were rising largely due to favorable fundamentals rather than to speculative pressures that would be indicative of a housing market bubble. However, the situation seems to have changed recently. Affordability has deteriorated significantly in the second and third quarters of 2005 as housing price increases have spiked higher. As a result, affordability is quickly closing the gap relative to this measure's long-run historical average.

Canada seems to be getting support from strengthening commodity prices.

The currency is pretty steady, with markets remaining fairly thin with little economic data. We're awaiting deeper markets, plus the release of employment reports for both Canada and the U.S. next week.

The labor market is getting too tight, so the Bank of Canada may have to raise the rate more aggressively to keep inflation from taking hold. Higher interest rates get investors to buy the Canadian dollar.

Markets are probably waiting for the announcement by the Bank of Canada tomorrow to get a sense of the characterization of the near-term outlook for policy: whether they'll flag they're poised to move to the sidelines or whether they're still contemplating further rate hikes.

We saw most of the indicators move up in the month, with the exception of the prices paid index, which generally provides an indication of strength in activity.