Log In
Register
Home
Topic RSS
Facebook
Twitter
Email this2:18 pm
What do you think? Prime should be moving up June 1st, 2010; savings rates and GIC rates up as well June 1st, 2010?
I'm hoping so to all of the above with a .5% increase in Prime June 1st. (that would be from 0.25% to 0.75%)
What do you think?
5:46 pm
I'm thinking it will go up, however, not by much. The unemployment rate is still sky-high (over 10% where I live - it hasn't improved at all since the downturn caused all the jobs to be shed), and I'm not sure how this persistent unemployment and seemingly jobless recovery will factor into how the central bank decides to set interest rates.
Gas prices are also going up, which will further raise costs for businesses and consumers.
6:03 pm
i doubt the BoC will raise rates until we start to see sustained monthly additions to the labour market. right now jobs data is all over the place (decent additions one month followed by losses the next month, etc...), which is a definite improvement from a year ago, but still not good enough to turn off the money printing presses. my gut feeling is that we won't see an increase until october or november. as for whether a raise will impact savings interest rates, it's hard to say because even when the rates do start to inch back up there will still be an enormous amount of cash sloshing around out there, so there might not be that much demand for it in the forseeable future. it's demand for cash that starts prodding the rates up.
1:38 am
December 12, 2009
Offline
I agree with the points made. The institutions paying the best rates on deposits are doing so for a reason, to shore up their balance sheets or to raise capital for lending. Banks that are sufficiently capitalized won't pay higher rates on deposits than they can get away with paying. I think you'll see the big banks paying rates under 1.5% for the next twelve months or so, even if prime inches up by a quarter percentage point to half a point this year.
Cheers,
Doug
2:13 am
October 5, 2009
Offline
The word I've been hearing from economists, is that the Bank of Canada will be bumping up rates by 1.5 to 1.75% in the latter part of the year.
3:54 am
I am not an economist, buuuuut...
BoC could either change the rate as the market demands (a "natural" rate change) or to try to fit some kind of monetary policy (an "artificial" rate change). If they make an artificial change, the market will respond in a way to balance it out.
Say for example they bump the rate by a HUGE amount when the market doesn't demand it. Then if you own Canadian dollars, the number you own can grow over the years. However, since this is an artificial rate change, the real value of your investment won't grow at that huge rate. In other words, the value of the Canadian dollar falls relative to other currencies.
Canadian monetary policy makers have a vested interest in keeping the Canadian dollar under par with the USD, because a lower domestic currency makes exports more lucrative, and the Canadian economy is very dependent on exports. This is similar to how China artificially locks its currency to the USD.
Since we're talking about planned rate hikes, it means either BoC is anticipating where the market will be, or are implementing a planned monetary strategy, though most likely it's a combination of the two. They know that at some point, stimulating domestic spending will become less important than stimulating exports. I guess the plan is for June 1st for that.
I don't really know what I'm talking about; this is just speculation. But I'd be willing to go further out on a limb and suggest that if the USD falls below par with CAD, and continues to fall too fast in the next couple months, then interest rates may be raised even sooner, to reign in the value of the CAD.
What think?
6:10 am
May 30, 2009
Offline
As far as I know, the BoC only sets the interest rate in order to keep inflation around 2%. They do not have a mandate to try and directly influence employment or GDP or anything else, just inflation.
10:43 am
March 25, 2009
Offline
The BoC doesn't have 100% control over some rates, like the fixed mortgage rates which are bond rates.
The 5yr BoC mortgage just increased by a huge .6% (that's huge for a 1 day move) without prime changing.
Have a great day
Please write your comments in the forum.