Mid-last week, the Bank of Canada bumped interest rates up by one-quarter of one percentage point. This still leaves it at a level that, five years ago, I never thought I'd see in my lifetime. But even moving up the Bank Rate to a measly 1 per cent suggested to me, at least, that the Bank must have thought that the economic recovery had taken hold in spite of lots of evidence to the contrary.

Then last Friday we learned that even though the Canadian economy did create some jobs in August, the unemployment rate actually edged up. That left a few people scratching their heads about why interest rates were pushed up at all.

There is a broad consensus that the powers-that-be, and by that I mean government and the Bank of Canada, should pursue "activist" fiscal and monetary policy. And by activist, I mean that they should react to market conditions, speed things up when they appear slow, and slow things down when they're going too fast.

But when it comes to the Central Bank, there another factor at work. In the business, it's known as credibility.

What that means is that after a Central Bank indicates something, it had better follow through on it. Earlier this year, Mark Carney suggested on several occasions that interest rates would go up through the summer and last week he followed through.

He followed through even though, in my opinion, the time wasn't right to raise interest rates.

There are all sorts of signs that the Canadian economy is cooling. My belief is that a bubble has formed in many different real estate markets across Canada. Vancouver and home-town Toronto immediately come to mind.

We're experiencing the worst travel numbers since those stats have been kept. That is, fewer and fewer visitors are entering our borders and they're spending less and less money than ever before.

And finally, government at all levels seems to be taking a long hard look at its spending and is starting to rein things in (not that I'm complaining).

What the economy is looking at is headwind after headwind after headwind. And given that Canadians are holding record levels of debt, it just doesn't seem to make a heckuva lot of sense to make carrying that load marginally more expensive. But that's what we saw last week.

Now the good news is that in his announcement around the interest rate decision, the head of the Bank of Canada, Mark Carney, gave himself some wiggle room. He suggested that what happens in the United States will go a long way to determining his next move. And that implies that sometime in the near future, interest rates that just went up could just as easily come back down.