Interest Rates

+ Average Prime Rate in Canada for the past 10 years is 4.87%, currently prime is 2.25%, the lowest rate in the past 10 years.

+ Average posted 5 Year Mortgage Rate in Canada for the past 10 years is 6.73%, currently it is 5.39% up from the low of 5.25% last month.

+ We expect short term interest rates in Canada to trend upwards because of the fear of inflation.

+ Long Term funding needs are smaller in Canada than elsewhere around the world therefore rates will increase slowly.

+ United States Short term rates have to stay low to assist with the stimulus policy and Long term rates will rise in response to their deficit funding.

Bank of Canada Governor, Mark Carney (MC)

+ MC Changed one word in a 3,131 word speech that he has used for 11 months, ‘Expressly’, and put Canadians on notice to look for an increase in the prime rate.

+ MC is concerned with our declining productivity growth in Canada as history shows that in a recession, productivity tends to improve as companies do more with fewer workers. He is disturbed that Canadian businesses are not in the mindset to change their thinking to compete in the global marketplace.

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