With the recent 5-year fixed rate mortgage hikes, hints that the target overnight rate will be raised in Canada, new mortgage rules that will put more emphasis on considering the risk of interest rate fluctuations, you’d maybe think that we’re entering the 1980s when interest rates were in the double digits.
But let’s take a reality check for a second.
Sure, interest rates aren’t going to remain at the record-low levels they have been. After all, housing prices can’t just keep going up and up and up. A new report by CIBC World Markets predicts that the Bank of Canada isn’t going to raise rates dramatically. It is far more likely that they will gradually raise rates over the course of a couple years.
Interest rates are likely to remain low by historical standards at no more than 2.5% at least until the end of 2011, CIBC Chief Economist Avery Shenfeld in the report. The Calgary Sun
We’re still not sure about whether we’re completely out of the recession. Job growth projections for March were more optimistic than actual statistics. And while inflation is edging higher, the Bank of Canada’s primary focus is still likely ensuring economic recovery rather than curbing inflation.
Also, they can’t raise rates too high…the loonie’s already just below parity! Raising rates would threaten to push it above the USD. Now THAT would be catastrophic for the economy.
So everyone chill. Rates are going to remain at relatively low levels.