US core inflation lower than expected

June 16, 2007

The core inflation rate prices (excluding energy and food) rose only 0.1 % in the US which was less than analysts were expecting. This should make it less likely for Ben Bernanke, the Fed chairman to move to raise US interest rates anytime soon.
In addition consumer prices continue to to fall in Japan and the central bank there has made it clear it won't be raising interest rates either.
This leaves the Bank of Canada Governor alongside the head of the European central bank way out in right field with his suggestion that rates may have to rise here.

So far Canadian manufacturing is estimated to have lost close to a quarter of million jobs due to the strong dollar. The CIBC bank estimates it may lose another 200,000 jobs a figure which the chief economist of the Canadian manufacturers association agrees with. It will take a lot of call centres, financial services and bars and restaurants to replace these jobs. One can be sure that the wages will be lower.

In the current international circumstances if Dodge raises rates while they are kept where they are in the States despite his attempt to talk down the dollar by suggesting that it is overvalued watch for it to shoot through the roof and head up above 95 cents US.