When the U.S. Federal Reserve moves its benchmark interest rates, Canadians feel the reverberations in more ways than one.
Though not a sure bet, a U.S. interest rate hike this week – the first in nearly seven years – would signal the world’s largest economy is back in business
That would be good news for Canada, helping drive higher exports, economists said.
Economists and investors are split on whether a U.S. rate increase is in the cards when the Federal Market Open Committee concludes its regular meeting on Thursday. The benchmark Fed funds rate has been at 0.25 per cent since December 2008.
“The U.S. economy is strong enough to allow them to step away from emergency low interest rate levels,” said Jennifer Lee, senior economist with BMO Capital Markets. On the other hand, “given the weakness in emerging markets, it wouldn’t come as a complete shock if they decided to hang back a little bit.”