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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

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Earlier this week the Bank of Canada (the central banking institution in the country) raised its key overnight interest rate with a quarter of a percent to 2.25%. In a official statement following the announcement the Bank spokesperson said that the national economy is doing well, the demand for credits remains strong and that this first interest rate hike won't hurt the recovery. In the meantime the Bank says that the economic recovery in Canada remains modest and the future increases would be reasonable. According to most experts this hike won't hurt the real estate market activity, which performs well in the last months compared to the same period of 2001.

The interest rate hike in Canada was the first such move in the last two years that followed the so-called New Economy bubble burst on the stock markets in March 2000. During the last 24 months the central bank in Canada followed closely the moves by the Federal Reserve in the US and as a result the interest rates went at the record low levels since the 60s. But with increasing signs of economic recovery since the beginning of this year the Bank of Canada began to worry about the small investors and their portfolios, which have eroded by the lower interest rates. The move by the central bank was immediately followed by the commercial banks, which pushed up the prime lending rates from 3.75% to 4.0%.

According to most experts quoted in the Canadian press, this interest hike won't hurt the real estate market, not at least for the time being. For them the real problems will occur when the prime lending rates pass above the mark of 6.0%, which means when the central bank increases its overnight interest rate to 4.0% and more. Given the cautious position taken by the Bank of Canada administration this will be highly unlikely scenario for the next months. Instead we can expect more moderate hikes (0.5% to 1.0% during the spring and summer months) and this only if the Fed decides to follow the similar policy of rates increases. Mr. Greenspan though still believes that the US economy situation is shaky so we can't expect this year any sudden moves toward rate hikes in North America.

As for the interest rate moves expected to come, everything depends on the situation in the real economy both in Canada and the US. If the economy moves up too quickly then the central banks can be put under bigger pressure to increase the interest rates in order to prevent the heating similar of that in the late 90s. Such heating though is highly unlikely in the next 12 months so we can predict that the good performance on the real estate market in Canada will continue throughout this year.

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