QUOTE (GarthChapman @ Jun 11 2008, 05:16 PM) I suspect we`ll see a good chunk of that disparity reduced via price reductions over the next 6 months, and that should help to keep inflation low and maybe will allow even more reduction in borrowing costs.
Hopefully so, Canadians have long been getting screwed in this regard. It`s entertaining how our prices adjust upward so quickly, but when the dollar appreciates, it takes forever to see the benefit.
The US is definitely experiencing stagflation (economic growth is essentially flat and inflation is taking hold above 3%) even though you won`t hear that scary word on the news networks. The inflation part explains Bernanke`s about-face on interest rate cuts. They are walking a razor`s edge, because while they want to curb inflation, the economy is slow and is therefore in desperate need of monetary policy stimulus, i.e. rate cuts. While the Cdn Feds are following the US lead, I doubt they will start actually raising rates anytime soon. Although a month ago I would not have predicted they`d freeze prime till it was 4.25 or so...