In the Business Section of The Globe and Mail yesterday was this assessment of the Canadian economy which is looking very healthy indeed, so the question is will there be a rate increase to combat a perceived over heating of the economy.

The Canadian economy, already the envy of the Group of Seven, is within striking distance of returning to its pre-recession peak.

Fuelled by a hot housing market, a rebounding manufacturing sector, higher incomes and a mini-hiring boom, the economy expanded in the first three months of the year at the fastest annualized pace in more than a decade. The stronger-than-expected 6.1-per-cent rate reported by Statistics Canada Monday was more than twice the rate of growth in the United States in the same period.

The report is the latest in a series of data releases to show that virtually every sector of the economy is picking up steam, and may clinch a Bank of Canada interest rate hike this morning.

Governor Mark Carney is unique among central bankers in the G7 – which also includes the U.S., the U.K., France, Germany, Italy and Japan – in already having to carefully watch inflation as Canada’s economy improves. Mr. Carney’s most recent projections in April showed annual price increases moving past his 2-per-cent target later this year, giving him enough ammunition to signal he was getting ready to raise interest rates as soon as today.

“The need for near-zero interest rates has clearly passed and the last couple of quarters have demonstrated that the emergency situation is over,” CIBC World Markets chief economist Avery Shenfeld said in an interview.

Total gross domestic product is now just 0.4 per cent below pre-recession levels on a quarterly basis, a dizzying rebound from this time last year.

March represented the economy’s seventh consecutive month of growth, Statistics Canada said. The 0.6-per-cent reading for the month implied enough solid momentum for Canadian Imperial Bank of Commerce to boost its second-quarter growth forecast by half a percentage point. Growth on an annual basis between October and December, despite being revised down a tick, came in at 4.9 per cent.

To be sure, economists including Mr. Shenfeld and Philip Cross, Statistics Canada’s chief analyst, said the move back to pre-recession GDP levels is really a technicality, when one considers the unemployment rate is still at 8 per cent.

An enviable situation indeed.

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Have a good one.

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