Will the rates go in Negative?
The Bank of Canada meets this week (June 3) for the first time with Tiff Macklem as Governor. Markets and economists are in agreement that the Bank will leave its key lending rate unchanged at 0.25%
But what do banks have to offer - as low as 2.05% VRM 5 years
“With the overnight rate already at 0.25% and the Bank of Canada’s recent guidance that it considers that the effective lower bound, a change in interest rates is unlikely,” said Alicia Macdonald, Associate director of Economic Forecasting at the Conference Board of Canada.
“Negative interest rates are back in the spotlight. Markets are pricing them in in the U.S. although not yet in Canada where the policy rate is still higher,” added Capital Economics senior economist Stephen Brown
“Overall, we do not think the Bank will pull its policy rate negative soon, even with a new Governor taking the helm.”
Overnight Index Swap markets are pricing in a 15% chance of an additional rate cut by the end of the year.