12 July 2010

•    Friday’s optimistic employment report has increased the odds of rate hike to 96%.
•    According to Friday Reuters poll, the majority of Canada’s securities dealers predict a 25 basis point (0.25%) hike this month. Moreover, they all forecast another rate increase in September.
Practically, it means that if the overnight rate rises to 0.75% on July 20, the prime rate will move to 2.75% (the last time it was above 2.50% was February 2009).