Saturday, October 9, 2010
Interest Rates Update, October 2010
The article included below was provided to me by Kristian Harris of Monster Morgage. It was written by: Michael Babad of Globe and Mail. This update was
posted in October 2010.
Bank of Nova Scotia expects short-term borrowing costs to remain at ultra-low levels well into next year as the global economy moves into a "slower lane of growth."
In a new forecast, Scotiabank economists, like others, say the rebound that began midway through last year has lost "considerable momentum," notably in major industrialized countries where government stimulus is expiring and consumers are cutting back. Central banks will in turn hold the line on the exceptionally low interest rates used to fight the recession.
"Monetary policy in this environment is expected to remain exceptionally accommodative well into 2011, keeping short-term borrowing costs at essentially 'rock-bottom' levels for the foreseeable future to help bolster market liquidity, facilitate refinancing activity, and promote borrowing-to-buy," the report says. "Japan recently lowered its benchmark rate to 'zero,' and undertook another round of government bond purchases. Similar stories are likely to play out in the United States and the United Kingdom where stumbling economies, fiscal restraint, and deflationary concerns have surfaced."
Scotiabank projects that the Bank of Canada will hold its benchmark overnight rate at 1 per cent until the third quarter of next year, and then hike by one-quarter of a percentage point, followed by a half-point increase in the fourth quarter.
Economists believe Friday's jobs report from Statistics Canada, which showed the labour market cooling somewhat, will stay the Bank of Canada's hand. It next meets Oct. 19.
"Renewed solid job gains will be tough to come by in the months ahead amid the lacklustre pace of underlying growth," said BMO Nesbitt Burns deputy chief economist Douglas Porter. "This solidifies the view that the Bank of Canada is now on hold. "
The Federal Reserve will remain near zero until the fourth quarter of 2011, followed by a projected quarter-point hike, the European Central Bank will stay at 1 per cent until it brings a quarter-point increase in the fourth quarter, while the Bank of England will stay at 0.5 per cent until the third quarter, then raising by a quarter-point, and another quarter point in the following quarter, Scotiabank predicts.
Thank you, Kristian. Keep watching for more news. Things are changing all the time. If you would like to discuss your financial status regarding the purchase of a home, call Kristian directly at 416 818 1645. If you would like to discuss further, call Betty at 416 427 1875 and let me help you with all your Real Estate needs.
Betty Bartusevicius, Sales Representative
Re/Max Realty Specialists Inc. Brokerage
905 828 3434
Fine Homes in 905
Directly at 416 427 1875