Over the past few months, major economists have backpedalled on their rate hike predictions. Not long ago, the consensus of economists was projecting a July 19th increase. Now, those same analysts are not looking for a rate bump until this fall or later. Some analyst believe there is 50/50 chance of rate increase this year. Some of the reasons why interest rates are not going up are
- Weak economic date in the US, our key trading partner,
- Core inflation that remains manageable,
- Global economic risks,
- Debt-laden consumers that are only cautiously spending,
- A strong Canadian dollar that is still acting as a brake in our economy.
As long as these factors continue to play a major role in our economy interest rates hikes will not happen until 2012.