Posted by: Daryl & Wendy Ashby | May 31, 2010

Rate Hike Perdicted for Tomorrow

Twenty-five out of twenty-nine economists surveyed by Bloomberg expect the Bank of Canada (B0C) to lift short-term rates by 1/4 point tomorrow.

Overnight index swap (OIS) traders are betting on higher rates as well. They’re pricing in a 75%+ probability of a hike on Tuesday. (Overnight index swaps provide a gauge of what the overnight rate is expected to average over a given period–in this case, over the next month.)

If the BoC does raise its key lending rate, it would be the first increase since July 2007—right before the credit crisis unfolded.

It would also be Mark Carney’s first hike as BoC governor.


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