While the Bank of Canada recently hiked its near-record low overnight interest rate (the rate of interest paid to large financial institution which tends to set loan and mortgage rates to consumers) by 0.25% – and may do so again at its next meeting on July 20th – U.S. rates will likely remain at their rock-bottom lows, and may even fall.
At least one member of the U.S. Federal Reserve Board “has repeatedly expressed his desire to increase overnight lending rates to 1% from the current zero to 0.25% range by the end of the summer,” according to Forbes. Nevertheless, Forbe‘s analyst, Michael Fento, points to glitches in recent economic data – including worse than expected first-time jobless claims and retail sales – that may necessitate the Fed staying with its ultra-low interest rate policy for the time being. He concludes that “the Fed’s next move is more likely an easing than a tightening of rates.”
Meanwhile, the New York Times reports that the governors’ panel at the Bank of England appears to be split on the direction interest rates should go after Britain’s central bank elected to leave its record low rate unchanged. With at least one panel member being said to have favoured a rate increase, this may portend “an earlier move to tighten credit than had been expected.”
Other sources show that diverse economies from Norway to China plan to leave rates unchanged, while Indian could increase rates at any time to ward off an unexpected surge in inflation.
Thankfully, Canada’s robust banking regulations, and a relatively robust and recovering economy, have allowed the Bank of Canada to keep rates in hand with little inflation.
