Higher Loonie Suggests Rates Won’t Change Soon

Higher Loonie Might Mean Delay in Mortgage Rate IncreasesThe higher the Canadian dollar climbs on broad-based weakness in the U.S. dollar, the less likely the Bank of Canada will be to resume interest rate hikes.

This assessment from Scotia Capital economists Derek Holt and Karen Cordes Woods means there is a greater risk the central bank will remain on the sidelines throughout 2011 as opposed to raising rates before their October call.

While Canada’s inflation-adjusted monthly trade deficit has fallen to record lows, the economists said it is possible that not enough time has been given for lagged effects to really grip growth and inflation with downside consequences to both. Click here to view full article.

 Yet another hint that mortgage rate increases may come later rather than sooner, possibly as late as next year. If so, our hot market could continue into the fall.