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Email this3:30 pm
December 16, 2020
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One of the Credit unions where I've held GIC's has started a 3.7% *variable* rate 3 year term with the option to cash out on its anniversary dates. It suggests to me that they along with others are betting on BoC lowering PRIME this Fall, but . . .
Please dust off your crystal ball(s) and lets hear your prognostications for where interest rates are headed - Short term - medium term - longer term and whether or not you'd consider a variable rate term at this stage of the game.
Background: " Bank of Canada Policy:
The BoC is expected to reduce its policy rate gradually through 2025 and into 2026, aiming for a neutral range of 2.25%-3.25%, barring significant economic shocks."
BUT are they going to be right?
3:58 pm
January 12, 2019
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.
My crystal ball says; "It's Anyone's Guess‼️"
.
.
'Caveat Emptor' 
- Dean
" Live Long, Healthy ... And Prosper! "
4:36 pm
December 16, 2020
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I'm not convinced ... you know more than this, what are you not letting on! 😉 😉
Inflation Trends:
Inflation has returned to the BoC’s target range of 1%-3%, with projections indicating it will remain near 2% over the medium term.
Housing Market Dynamics:
Lower interest rates are anticipated to stimulate housing demand and prices, especially as many homeowners renew mortgages at higher rates over the next two years.
Government Policies and Stimulus
(think Carney, build baby build):
Fiscal measures such as rebates or infrastructure investments may counteract some deflationary pressures but could also reignite inflation if overly aggressive.
1:04 pm
October 27, 2013
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Dean is right. It is anyone's guess, especially with the volatility and resulting impact of the orange man's tariff game. All Carney can do is throw some money at supporting particularly hard hit industries, and likely only those that pay some political (voting) dividends at that.
My plan is to simply ride the near term wave in whatever direction it goes.
8:03 pm
April 6, 2013
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The banks and credit unions also know economists, including any staff economists, can't forecast interest rates either.
The banks and credit unions actually don't care about interest rate forecasts. They are lenders, not hedge funds. That variable rate P-1.25% = 3.70% GIC will be used to fund variable rate loans, like home equity lines of credit or variable rate mortgages.
Bank or credit union doesn't care which way interest rates go after that. Both the interest paid on the variable rate GIC and interest received from the variable rate loans will move in step, locking in a fixed spread between them.
5:41 pm
March 15, 2019
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"Bank or credit union doesn't care which way interest rates go after that."
The problem is loan defaults if interest rates rise too much.
Bankruptcies didn't stop this gentleman from being a two term president.
Please write your comments in the forum.