The dollar has risen to a 10 month high on Monday October 19, 2009. There are growing expectations and growing risk that inflation will force the BOC to break their promise that interest rates won't be increased till the second quarter of 2010.

According to the chief economist of the National Bank Financial, the time for raising the rates is not now, yet June of 2010 might be to late. Suggesting the Bank's commitment for low rates will likely not be met and probably come before then.

The benchmark interest rate was lowered to a record low of .25% to offset recession and financial crisis. However, the rate is too low relative to core inflation which is 1.9% as of June this year. This is one basis point below the banks projected rate.

Higher interest rates will help support the Canadian dollar, which has risen 8% this month. The dollar reached US $92.5 on Monday the high since last October. The rise is due to a boost in home sales which surged 11%.

Commodity prices have also increased amid speculations of an upward demand.

The BOC feels the recession is over. When interest is beginning to turn, the interest rates will also rise.