1 June 2010
Other BoC’s announcement details:
• “Canadian activity is growing quickly”.
• “European situation influenced Canada only with a small fall in commodity prices and some tightening of financial conditions”.
• “Household spending is expected to decrease because of moderate income growth”.
• “Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.”
It all suggests that another rate hike on July 20 is really doubtful. (Bond yields are going down considerably today: traders are trying to find safe investments).
The interest rates tendency will seriously depend on the global growth and the results of European situation.
Yesterday Big 5 bank economists suggested that prime rate will rise to 3.25% by the end of the year. By the end of 2011, their forecasts show a 5% prime rate. But as always, these forecasts will change in a few weeks.
The BoC also noted: “This decision still includes serious monetary stimulus in place.” For example, variable rates are still under 2%.