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Bill Morneau’s status-quo economics: big bank profits, corporate giveaways and debt

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They’re back. Last week interest rates went up for the first time in 7 years. Not by much; only 0.25 percent, but it’s definitely a warning shot across the bow of Canadian borrowers.
The man at the helm is Bank of Canada governor Carlos Poloz, who signalled the rate increase back in June, citing Canada’s healthy economic growth in the first quarter of this year, a world economy gaining momentum, especially in the US, and his comfort with oil prices running at between $40 and $50 a barrel. There’s another reason he didn’t mention: a desire to cool a red-hot real estate market in Canada’s major cities. And a couple of reasons not to raise rates: shaky consumer confidence and an inflation rate that’s slowed to just 1.6 percent.

All of this tinkering with the machinery won’t affect Canada’s six big banks a whole lot. They’ve been rolling in profits, bringing in collective profits of $10.5 billion in just the first quarter of this year. The profits don’t only come from car loans and mortgag…

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