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Donald Wilson
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In my predictions for 2011, some of which I repeated in my response to one of your news articles earlier this year, I said that I believe that interest rates are not likely to rise much this year, at least not more than .5% for the Prime Rate, or .5% for the 5 year fixed mortgage rate. There are many technical tools used to predict marginal interest changes, including changes in direction of change but I believe that the Bank of Canada is currently stuck in a situation where any significant change upwards in the prime rate could trigger a run on the Canadian dollar that could cause a major shift upwards in the valuation of the Canadian dollar vs the US dollar. If the Canadian dollar were pushed up significantly over the next year this could have serious consequences for the Canadian economy, particularly manufacturing in Ontario. Basically, if the US economy doesn't strenghten rates can't go up much in Canada, no matter what else is driving us. Of course inflation targets still drive interest rates, but is anyone really predicting major rises in inflation rates under the current economic malaise here in Canada? I don't think so. Just saying.... don't count on interest rate increasing much during 2011.
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Feb 1, 2011