|
Greetings to all and a warm Welcome to New Subscribers.
“What are the interest rates going to do?...”
I get this question all the time…
Courtesy of Globe & Mail June 8, 2004 The Bank of Canada left interest rates unchanged and — while cautioning that high oil prices could trigger a jump in overall inflation — offered little to suggest that it would rush to hike borrowing costs in the immediate future. The latest decision, which had already been widely anticipated by the markets, leaves the bank's trend setting target for the overnight rate at 2 per cent. That rate is the central bank's key monetary policy tool, telling major financial institutions the average interest rate that the Bank of Canada wants them to charge each other on overnight loans. A change in that rate typically triggers a corresponding move by major banks in their prime lending rates. The central bank has already lowered borrowing costs three times this year to jump-start a flagging economy. In its last outing, however, the bank had also broadly hinted that the most recent easing cycle had come to an end. Recent reports — including last week's much-stronger-than-expected reading on May employment — have also fuelled speculation that rate increases may be in the cards by late summer or early fall. In Tuesday's statement, the bank said recent economic reports have been generally in line with its own forecasts for both growth and core inflation, which excludes the most volatile components of the consumer price index. But it also suggested that overall price pressures may spike sooner than expected because of high oil prices, which last week touched new record levels. Meanwhile, the Bank of Canada said core inflation in this country — which was 1.8 per cent in April at an annual rate — still isn't expected to move back to the bank's 2 per cent target until the end of next year. The central bank has set a 1-to-3 per cent target on inflation and likes to see it at the mid point of that range. The central bank also continued to predict that the economy would return to its 3 per cent production potential by the third quarter of 2005. The financial markets have already priced in three rate hikes this year, starting at the bank's fixed-date policy announcement on Sept. 8, according to Merrill Lynch. In the United States, the Federal Reserve is widely expected to start increasing interest rates — which are now at their lowest level in more than four decades — by later this month.
CMHC Economic Forecast for 2004-2005
Housing market conditions and outlook Drivers of housing market demand
Revisions to the outlook for 2004 and 2005
Renewed job creation will accompany the recovery in economic growth
… but will remain very low by historical standards
There you have it…
(September 1,2004)
I trust this information will come in handy and help you to stay informed. One Small Saving on your Interest Rate will be worth Thousands! in the Long Term. Feel Free to call anytime…
Dan Heon
|
