Rates to rise 1.5 per cent in 2011: Merrill Lynch Canada

Rates to rise 1.5 per cent in 2011: Merrill Lynch Canada

The Bank of Canada will likely increase interest rates by 1.5 percentage points because of anticipated inflation later this year, according to Sheryl King, chief investment strategist for Merrill Lynch Canada.
 
The rate rises would lead to increased costs for many types of consumer debt, including variable-rate mortgages.
 
King predicts inflation is growing because the economy is quickly using up the extra room from the 2008 recession. “I think that inflation in Canada is going to be the big story for 2011,” she said at the investment bank’s global outlook conference in Toronto.
 
The current core inflation rate, which excludes unstable factors such as food and energy, ranges between 1.4 and 1.5 per cent. This could double to almost 2.7 per cent by the end of the year, prompting King to forecast the higher borrowing costs.
4 Comments
  • KL 2011-01-14 6:36:04 AM
    Perhaps this young lady at Merrill Lynch should talk to Benjamin Tal. Just 6 weeks his world market and Canadian predictions were no where near this level. BT has been right on for the past 10 years - what would make this any diff today ???
    Post a reply
  • CK 2011-01-14 9:00:27 AM
    Merrill Lynch is once again out to lunch on this one as well. They were also the ones predicting home prices in certain parts of the country to crash by 50%, specific cities like Saskatoon was overpriced by double...instead it continues to be a leading market and prices remain steady even rise and Winnipeg is in for a boom. Whats with ML and their 50% rate increases and/or market price collapses by 50%...all doom and gloom pictures with no shred of stats to back it up.
    Post a reply
  • padarzoli 2011-01-14 11:10:19 AM
    Lenders are competing as it is, all slow getting in business another rate increase will slow purchase even further, pushing out many buyers... it works as it is, gradual increase OK but 1.5% are they insane? I know it is just one of them think thank predictions, but bad news always has merit to…
    Post a reply