Greece may be dominating the headlines, but this week the more significant news could be found on page two of the business section, as three central banks aligned rates, but for very different reasons.

Let’s start with the less heartening news. The Bank of Canada cut its overnight target rate by 25 basis points to 0.50 percent – a five-year low – citing disappointing growth in the first half of 2015, as well as inflation well under its 2 percent target. It slashed growth expectations for this year from 1.9 percent to 1.1 percent, citing the low price of oil and its “atrocious” effect on the economy, according to Bank of Canada Governor Stephen Poloz.

It was a very different story in the U.K. Bank of England Governor Mark Carney – previous governor of the Bank of Canada – indicated earlier this week that rate increases are closer than one might think.  The Bank of England has had rates at a record low of 0.5 percent since March 2009. The data supporting this view is decidedly mixed, but like U.S. Federal Reserve Chairwoman Janet Yellen, Carney emphasized that any rate rises are data-dependent and gradual.

Carney must have taken great comfort in Yellen’s Congressional testimony this week, with its upbeat portrayal of the U.S. economy. Yellen again signaled to markets that rates will rise this year from the record low of 0.25 percent, with some analysts predicting 0.50 percent in September. This relieves Carney of some of the pressure of being the lone major central bank in rate hiking mode, and spreads the effects of higher rates across a broader swath of financial activity.

So we see that central bank policy seems to be aligning around 0.50 percent – a sort of economic alignment of financial planetary orbits. The difference is that two of these central banks – the U.S. and the U.K. – are rather proud of their economies and need to normalize policy while the Bank of Canada seems to be entering into what it hopes is a temporary setback for the Canadian economy.

My View: I understand Poloz’s attempt at financial stimulus and am encouraged by what seems to be a normalization of policy by the U.S. Fed and the Bank of England. Both of those economies have recovered from the troubles of the last few years and policy normalization is another step in cementing that perception in the global economy.

The information in this report was compiled by the staff at City National Bank from data and sources believed to be reliable but City National Bank makes no representation as to the accuracy or completeness of the information. The opinions expressed, together with any estimate or projection given, constitute the judgment of the author as of the date of the report. City National Bank has no obligation to update, modify or amend this report or to otherwise notify a reader in the event any information stated, opinion expressed, matter discussed, estimate or projection changes or is determined to be inaccurate. This report is intended to be a source of general information. It is not to be construed as an offer, or solicitation of an offer, to buy or sell any financial instrument. It should not be relied upon as specific investment advice directed to the reader’s specific investment objectives. Any financial instrument discussed in this report may not be suitable for the reader. Each reader must make his or her own investment decision, using an independent advisor if prudent, based on his or her own investment objective and financial situation. Prices and availability of financial instruments are subject to change without notice. Financial instruments denominated in a foreign currency are subject to exchange rate risk in addition to the risk of the investment. City National Bank (and its clients or associated persons) may, at times, engage in transactions in a manner inconsistent with this report and, with respect to particular securities and financial instruments discussed, may buy from or sell to clients or others on a principal basis. Past performance is not necessarily an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.