Here is an interesting topic to discuss for the beginning of the week:
According to Scotia Bank economists, they are confident in their prediction that interest rates will remain the same (Prime) until about 2016. They are saying this is the case because the economists are predicting that the Canadian economy will not overflow into incredible demand in the next couple of years to come. Because of this, there would be no reason for the Bank of Canada to raise its prime lending rate. They further to go on to say that the Bank of Canada’s policy rate is currently at 1% and expected to stay there for at least the next 1-3 years. In order for this to rise, the economy would have to grow by at least 2.5% every year for this to start to change. Over this past June, the economy has only grown by a small 1.4%, economists are predicting by the end of 2013, the growth would have only grown to be about 2.0-2.5%. This very small economic growth may spark lower interest rates once again, to stimulate more mortgages being produced, is a possibility. The Bank of Canada does not view it favorable to have low interest rates in regards to individuals who are saving ie. Pensioners. It also promotes individuals to spend more than their means and therefore potentially increases overall household debt.
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