Rising Interest Rates Predicted

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April 8, 2010

Increase by Matthew Marksbury

Once again, the Scotia Capital has released a new Capital Points report! This one deals with the currently low interest rates and the possibility of them rising, since, as claimed in the report, the reasons for keeping them low have clearly passed. The markets, though, are ill-prepared for the risk of the Bank of Canada increasing the rates, the report states.

Nevertheless, interest rates are expected to increase. Some of the reasons why Scotia Capital predicts this are: stronger evidence of a larger growth than the Bank of Canada expected and the early evidence of February increases forecasting the continuation of growth. It would be sensible if the hike was announced on 20th April, as it would be smart to increase the rates together with a completely revised outlook to back it up.

The report provides more arguments, though – check it out. I would expect the rates to increase in April, or at the latest in June. Actually, I’m quite surprised they are still this low. Good news for the buyers.