That Inflation Scare

Financial markets seem to be betting on an interest rate increase in the wake of news that the CPI year over year inflation rate jumped to (the horror, the horror!) 2.0% in February.  A look at the numbers shows that any inflation problem beyond  temporary gas price issues is pretty well confined to Alberta. Here, the year over year inflation rate in February was 4.9%, driven by a stunning 19.3% increase in owned accommodation costs (ie soaring house prices).  Outside Alberta, only Manitoba and BC have inflation rates above the national averag (2.1% and 2.2% respectively) Does it really make sense to to hit the whole economy with an interest rate increase and a higher dollar to squash a housing bubble which is pretty well-c0nfined to one province?

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