[Raine]

Quote:Bank rate up to 3 per cent
Canadian Press
October 18, 2005

OTTAWA -- As expected, the Bank of Canada nudged up its key overnight interest rate by a quarter percentage point to 3.0 per cent on Tuesday, the second such bump in two months.

Chartered banks and other financial institutions were expected to follow suit with their loan rates.

The central bank warned that this is likely the first in a series of rate hikes over the next few months. Some analysts have predicted the rate will hit four per cent by April.

''Overall, the Canadian economy now appears to be operating at its full production capacity,'' the bank said in announcing the increase.

It said there are clouds on the economic horizon.

While growth has been solid, jumps in energy prices and the robust Canadian dollar are concerns.

Inflation has been running at about two per cent, but rising energy prices are expected to push that up to three per cent in the next few months, the bank added. Inflation is then forecast to slip back to about two per cent in the second half of next year.

''Short-term risks to this projection appear to be balanced,'' the bank said. ''But as we look further out to 2007 and beyond, there are increasing risks that the unwinding of global economic imbalances could involve a period of weak economic growth.''

The bank is to outline its views of the economic future in more detail Thursday, when it releases this year's second Monetary Policy Report.

ING Direct has it's big 3% Savings sale on... wonder if they'll up it to 3.25% on this news