Bank of Canada may raise rates soon

The Bank of Canada appears ready to add its weight to global tightening. From Bloomberg:

The Bank of Canada said for the first time in a year that it's ready to increase interest rates because inflation is accelerating faster than it expected.

The central bank may raise rates "in the near term" should inflation stay above its 2 percent target, policy makers said today in a statement from Ottawa. The Canadian dollar rose to the highest level in more than 30 years and government bond yields surged. The bank, which kept the benchmark rate at 4.25 percent today, next meets on July 10...

"There is an increased risk that future inflation will persist above the 2 per cent inflation target and that some increase in the target for the overnight rate may be required in the near term to bring inflation back to the target," the central bank said today in its statement. The Bank of Canada had said since July that inflation risks were balanced.

Meanwhile, the European Central Bank does not appear to be stopping just yet. From Reuters:

European Central Bank policymakers have delivered stiff warnings on inflation, convincing investors that interest rates will rise at least twice again as inflation threatens to test the ECB's tolerance.

Governing Council member Axel Weber said in a newspaper interview published on Tuesday that euro-zone economic growth is robust and the ECB is ready to apply the monetary brakes through higher interest rates if necessary to control inflation.

His comments, combined with German data suggesting euro-zone inflation is hovering close to the ECB's 2 percent ceiling, persuaded bond markets that rates are very likely to reach 4.25 percent or higher later this year.

The Federal Reserve still looks the least likely among the G7 central banks to raise rates at the moment, although improving confidence could nudge it in that direction. From Bloomberg:

An index of consumer confidence in the U.S. jumped more than forecast in May, signaling consumers will continue to spend in the face of record gasoline prices and a slumping housing market.

The New York-based Conference Board's index of consumer confidence rose to 108 this month from a revised 106.3 in April, a five-month low. The index averaged 105.9 last year.