Reuters poll 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. — Financial Post
Bloomberg’s most recent economist survey forecasts rates rising 2% by first quarter 2011. -– Bloomberg
“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 — Kelowna.com
There is no "significant risk of a double dip” recession. — TD economist, Craig Alexander — Winnipeg Free Press
2% economic growth may be the “new normal” after 2011 says Bank of Canada head, Mark Carney (story). 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 –- Financial Post
“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 -– Globe & Mail
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.
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