The Bank of Canada announced yesterday the target for the overnight rate will be held at 1/4 percent.
The bank commented that “global economic recovery is under way, supported by continued improvements in financial conditions and stronger domestic demand growth in many emerging-market economies.”
While the outlook appears strong for 2010 and 2011, the recovery still relies on the “exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems.”
Higher Interest Rates Down The Road?
Inflation has been steady. Inflation numbers released this morning showed that inflation has been relatively steady at 1.3 percent, which was below expectations. Unless the CPI rises considerably in the near term, it is unlikely we will see interest rates rise.
It is important to realize that while central bank rates are at record lows, they are near the bottom with only one way to go – up. The question is when will interest rates rise and by how much?
When interest rates rise again, those who are at their spending capacity may suffer and we may see another round of bankruptcies as lines of credit and mortgage rates increase.
Related Articles
- Bank of Canada Cuts rates 0.5% to 3.0%
- Bank Of Canada Maintains It’s Overnight Rate
- What To Do When Interest Rates Fall?
- Rates & Tools
Print This Post
{ 4 comments… read them below or add one }
I was quite surprised that the announced that the Bank of Canada decided to freeze the interest rates for a little while longer. I guess that means the housing prices are going to continue to go up, up, up. *sigh*!
@youngandthrify – Perhaps. But it could be a bubble about to burst.
I think that the Bank of Canada will increase the bank rate from 0.50% to 2.00% within one year.
I think that the Chartered banks will follow suit, but will increase mortgage and lending rates and all other bank fees by more than the 1.50% increase in the bank rate, probably by 2.50% or 3.00%, because they are greedy. The banks do not care about the ordinary hard working people because they know that, nowadays, most people need and also like to spend money, are too busy with life (i.e. work, children, parents, house duties and maintenance, putting food on the table etc…) and don’t have time to actually see how much they are being ripped off by the banks and probably don’t even realize it………….right now…. But Eventually…. they will and then………it might be too late. So there! Let’s go to Star Bucks and buy 2 extra large latte’s. That’ll be $11.52 please. So why should the bank charge astronomical fees too.
I Meant:
So why should the bank NOT charge astronomical fees too.