Canadian market strong, says Finance Minister

Although there may be a need to further interest rate cuts here, the Canadian Finance Minister says the economy is still strong.

Speaking at the convention in Davos, Switzerland, the Canadian Finance Minister Jim Flaherty said that Canada's economy is doing just fine.

According to Flaherty, as reported at, "We have strong economic fundamentals. We have strong commodities. We are a net exporter of oil. We are paying down debt and running surpluses. We will continue to do that."

The Canadian economy is dependent in many ways on what happens in the US, though there is little chance that they will see as sharp of a decline in economic factors as the US will in coming months.

According to the Bank of Canada, who presented additional facts yesterday, the economy is changing. It lowered its economic growth forecast to 1.8 per cent, which is down from 2.3 per cent predication made in October. This number, which is an indicator of the growth of the economy over all of 2008, was reduced mainly due to the drop in exports due to a lowering demand out of the US.

Additionally, the Bank of Canada revised its inflation forecast for 2008 adjusting it from October's 2.4 per cent prediction down to 1.4 per cent for the second quarter.

According to Flaherty, it may be necessary to further cut the interest rate offered by the central bank due to the global credit squeeze. On 21 January, the Central Bank cut the rate one quarter point. Additional cuts are likely over the next three decisions by new governor Mark Carney, according to most economists.