The OECD argues that Canada’s ultra-low one percent central bank rate needs to start climbing to counter inflationary pressures; especially as the economy shows signs of sustained growth
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Toronto, Canada (PRWEB) December 04, 2014
Canadalend.com, the leading low-cost private mortgage solution provider in Canada, is releasing its comments on a report from the Organisation for Economic Co-operation and Development (OECD) that the Bank of Canada will start raising interest rates in May 2015.
According to a recent report from the OECD, the Bank of Canada will start raising its overnight lending rate this coming May (and increase it steadily thereafter), which is a full six months ahead of most economic projections. (Source: OECD, “Canada - Economic forecast summary (November 2014),” November 23, 2014; http://www.oecd.org/economy/canada-economic-forecast-summary.htm.)
“The OECD argues that Canada’s ultra-low one percent central bank rate needs to start climbing to counter inflationary pressures; especially as the economy shows signs of sustained growth,” says Bob Aggarwal, president of Canadalend.com.
Aggarwal explains that raising the overnight lending rate, which has been pegged at one percent since late 2010, would have an immediate impact on interest rates. The overnight lending rate influences the Prime Rate, which is what variable mortgages, loans, and lines-of-credit are based on.
However, there are a number of reasons why the Bank of Canada will not raise interest rates until later in 2015, says Aggarwal. For starters, there are numerous risk factors underpinning the global economy: the eurozone is on the brink of slipping back into a recession and growth trajectories in China, Russia, and Japan are also a growing concern.
“Economic data out of the U.S., Canada’s biggest trading partner, are encouraging; the economy is growing and unemployment is declining. This suggests the U.S. Federal Reserve won’t raise its record-low rates until sometime in the middle of next year,” Aggarwal adds.
At the same time, the Bank of Canada has suggested that it will not raise its rates ahead of the Federal Reserve, says Aggarwal. On top of that, the rates in the U.S. are much lower than those in Canada, so even if the Fed does raise them in June, the Bank of Canada has room to weigh its options.
“The Canadian real estate market remains strong; even as we head into the winter, a period that traditionally experiences a lull. With interest rates expected to remain low until at least the middle of 2015, now is the perfect time for first-time home buyers looking to step onto the property ladder to contact Canadalend.com,” Aggarwal concludes.
The independent, licensed agents at Canadalend.com can help home buyers find the best mortgage at the best rates; a mortgage that meets their short- and long-term financial and lifestyle needs. Canadalend.com also provides clients with commercial mortgages, home equity credit, debt consolidation, and help with financing concerns.