Tag Archive: rate forecasts


Canada Will See Higher Rates Before Lower Rates: Scotia

The talk of the market this month is how traders are pricing in a decelerating economy and lower interest rates — to which Scotiabank Economics replies, think again. December’s selloffs in oil and equities and incessant chatter about yield curve inversion got many thinking we’re headed towards a rate cut by 2020. But in a recent report, Scotia challenged that...

Bank of Canada Rate Decision: Doves Fight the Hawk

The market knew we wouldn’t get a rate hike today. Instead, it was scouring the Bank of Canada’s messaging for guidance on where rates are headed. And the market found it. The bank’s statement this morning reinforced that it expects higher rates, but it will take longer than they thought. Here’s more on the BoC’s latest decision, and what it...

The Market Tempers its Rate Hike Bets

The smart guys betting billions of dollars on interest rates are pulling back their wagers on 2019 rate hikes. (More on that, if you’re interested.) And if you believe those traders, the end of the current rate-tightening cycle may not be far off. The market is now pricing in just two more U.S. rate increases between now and the end...

Next Stop for Rates is “Neutral,” Says Poloz

“[Canada’s] policy rate will need to rise to neutral to achieve our inflation target.” That was the headline-making quote yesterday from Bank of Canada boss Stephen Poloz. Speaking in front of the parliamentary finance committee, he repeated what the BoC’s been saying for over a year: “Our estimate of neutral is in a range—currently 2 ½ to 3 ½ per cent....

Mortgage Rates. The Day of Reckoning

“You better be prepared to deal with rates 5% or higher. It’s a higher probability than most people think” —JP Morgan CEO, Jamie Dimon What if interest rates surged far higher and faster than you now envision? Picture this scenario for a moment: U.S. core price inflation above 3% for the first time since 1995 U.S. unemployment at 60-year lows...

Canadians Can’t Predict Interest Rates. But They Try.

Two-thirds of consumers expect interest rates to rise in the next 12 months, according to a new report from Mortgage Professionals Canada. Only a measly 2% expect rates to fall. But that’s not as surprising as it seems. There is a built-in bias towards higher rates and there has been for years. “Through the entire history of this question, Canadians...

Canada’s “Neutral Rate” in Perspective

The “neutral rate” has taken on a life of its own. The Bank of Canada is talking about it, analysts are talking about it, the media is talking about it and everyday mortgagors are talking about it. Millions of Canadians, us included, use it as reference when trying to estimate how high rates might go. But the neutral rate is...

How a Trade War Could Hold Rates Down

“We cannot withstand a trade war with the United States” – Rona Ambrose. When over 70% of your exports go to one country, and that country’s representatives say, “There’s a special place in hell,” for your Prime Minister, that’s a problem. This is what the state of relations has come to between two of the world’s closest allies. Given Trump’s tendency to...

Don’t Go Variable Because Rates Are “Overextended”

The worst trap a mortgage expert can fall into is thinking they’re shrewd enough to predict interest rates. Yet, they do it because they: Think they’re smarter than the market Want media, readers or clients to think they’re smarter than the market Are completely delusional. The most comedic rate commentators are the ones who couch their predictions in vagaries so...

Economists or Puppies: Who Predicts Rates Better?

If Jimmy Fallon’s “puppy predictors” ever start forecasting interest rates, some economists could be out of work. These four-legged furballs may very well have just as much forecasting ability as your typical Bay Street analyst. To “prove” it, we use 20/20 hindsight to our advantage (and economists’ disadvantage). Taking a trip back to 2015 shows just how reliable economic forecasts...