Mirror, mirror, on the wall! Who’s got the clearest crystal ball?
(I doubt it’s me, but here goes)
The Bank of Canada is not going to raise rates tomorrow. Not just because I say so. Or because the Financial Post says so , but for a few other key reasons:
1. The Bank of Canada said they wouldn’t
2. Our economy is recovering, but emotionally we’re far too scarred from the recession to handle a nasty surprise.
3. Canadian Bond Yields, which are market driven, haven’t gone up in anticipation of a move. They always go up in anticipation of a move – and then go back down again if they’re wrong. Bond traders don’t expect a surprise, so I don’t either.
Despite the fact that Canadian real GDP went up 5% last year and Prime Minister Harper sees encouraging economic signs , there is still plenty of risk to the recovery so raising rates too soon could be a cold shower just when things are starting to heat up.
If I’m wrong I’ll probably just delete this post and replace it with a different one.