The bank of Canada is operating textbook econ 101 here in hiking rates in anticipation of inflation going higher 12-16 months in the future, because we're operating at full capacity right now in Canada and it looks like we're going to continue.

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We're looking for a relatively good year in 2006, given that wages are up and the labor market is fairly tight.

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If we see them increasing their outlook for the world economy in terms of growth and we see that feed into Canada, it may justify another rate hike to 4.50.

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