The Bank of Canada (BoC) held their benchmark interest rate on September 3, 2008 at 3.0%. This was in line with the expectations of most economists from the major banks.
Our roundup of the Big 5 Bank’s economic forecasts show that economists at these institutions are expecting rates to stay the same until the Third Quarter of 2009. The only exception was Scotia Bank which had forecasted a drop in the prime rate by 1/4 in the Fourth Quarter of 2008 and another 1/4% in the first quarter of 2009.
Here is what the big banks are forecasting for interest rates:
- TD Economics – Interest Rate Outlook table shows the BoC’s overnight rate (hence the prime rate) staying the same until the 3rd quarter of 2009 - TD Economics report dated Sept 25, 2008
- BMO Nesbitt Burns – Prime rates to remain stable until the 3rd quarter of 2009 – BMO Capital Markets Economics dated Sept 26, 2008
- RBC – …”This suggests that the central bank will remain on the sidelines monitoring the economic data to see whether one or the other risk comes to dominate. Our forecast assumes a 3.00% overnight rate through the end of this year before being gradually raised in 2009 as the downside risks to growth ease. – ” – RBC Financial Market Update dated Sept 8, 2008
- CIBC Wood Gundy – Table shows rates increasing in Sept 2009 by 1/2% – CIBC World Markets Forecast dated Sept 23, 2008
- ScotiaCapital – Drop in the overnight rate (hence the prime rate) by 1/2% – Scotiabank Group Global Economic Research dated Sept 9, 2008
This blog is being written on the eve of the vote of the US House of Representatives on the $700 Billion dollar bail out plan. Which ever way the vote goes, I would expect that the major banks will be revising their interest rate forecasts.
