the victoria day weekend is upon us - the bank of canada meets again at the end of May...what will happen ?... well the canadian dollar is at a 30 year high - which will likely keep the bank of canada on the sidelines even though core inflation is at a high of 2.5% - the high dollar could trigger as slowdown in our economy later in the year - and the US economy is still weak - also there is the eventual spectre of the Chinese stock market tanking after a 150% increase - this would cause a world wide drop in the stock market - like we saw in the early spring. Consumer confidence would be rocked and they would likely go into hiding - which would trigger a slow down - thus forcing the bank of canada to lower rates - in order to keep the economy moving.
time will tell - but for now I suspect the bank of canada will keep prime constant - but the banks will increase mortgage rates as the spreads over the govt bonds has narrowed dramatically. Next week expect rates to rise 20-25bp..
greygoose out...where is the vodka and olives ?
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