Mortgage rates will be "low, well into the usually strong spring
home-selling season." (i.e. at least another six months.) -- BMO
economist, Sal Guatieri
The BoC will lift its target lending rate 2% by early 2011. -- Scotia Capital economist, Derek Holt –
Reuters polled of 20 noted economists. The median forecast is for a
1/2% hike in Q3 of this year, and another 1/2% by year end. -
Bloomberg’s most recent economist survey forecasts rates rising 2% by first quarter 2011.
“The dangers to keeping essentially a zero rate policy are rising.
We'll be looking for the start of a tone change in (the next) statement
or Canada, in our opinion, runs the risk of being the bartender who
offers one too many shots to a drunken patron." -- Scotia Capital
economists Derek Holt and Karen Cordes
There is no "significant risk of a double dip” recession. -- TD economist, Craig Alexander
2% economic growth may be the “new normal” after 2011 says Bank of Canada head, Mark Carney If he’s right, it suggests moderate interest rates over the long-term.
By the way, don’t expect any more rate hints from the Bank of Canada
for a while. Carney says he doesn't feel “compelled” to give more
“guidance” at this point.
“On average, the first rate hike following a recession takes place one
quarter before the output gap closes…If this strategy is replicated
this time around…then the very earliest the bank will move is the
second quarter of 2011.” -– Economist David Rosenberg –-
“If the bank were to raise interest rates to cool the housing market
now – when inflation is expected to remain below target for the next
year and a half – we would, in essence, be dousing the entire Canadian
economy with cold water just as it emerges from recession.” -- Bank of
Canada adviser, David Wolf
Wolf
isn’t alone in that thought. Several economists warn that premature
rate hikes would damage our fragile recovery. That ups the odds that
variable mortgage rates won’t rise before at least June 30 (the end of
the BoC’s conditional rate commitment).
If you throw all of
these opinions into a pot and simmer for 20 minutes, it boils down to
the first rate hike taking place in the third, or possibly fourth,
quarter. As always, take that with multiple grains of salt because the
next round of economic data could change the course for rates…yet again.
