Rookie Bank of Canada Governor Mark Carney gave his first speech outside of Canada yesterday in New York and indicated that he is looking strongly at stalling his position on rate cutting due to pressures of inflation fueled by rising gas prices and food.  Now, where have we heard that before…right everywhere!

For the average Canadian who is over leveraged this is certainly akin to boarding up your windows to prepare for the hurricane.  Interest rates WILL rise in 2009 so get your debt down, under control, or at least re-organized such that you can fix it in and ride out the increasing rate train.  Taking out equity would be a great strategy because you can get nice low rates and payments and you can lock the rate in.

Rookie Bank of Canada Governor Mark Carney gave his first speech outside of Canada yesterday in New York and indicated that he is looking strongly at stalling his position on rate cutting due to pressures of inflation fueled by rising gas prices and food.  Now, where have we heard that before…right everywhere!

For the average Canadian who is over leveraged this is certainly akin to boarding up your windows to prepare for the hurricane.  Interest rates WILL rise in 2009 so get your debt down, under control, or at least re-organized such that you can fix it in and ride out the increasing rate train.  Taking out equity would be a great strategy because you can get nice low rates and payments and you can lock the rate in.

I think Yes.  If you look at the US who of course is leading the cause of all the rest of the housing turmoils globally then you would say we are climbing out.  Even though housing starts are at the lowest level in 17 years, but the good news is the rate of the decline has dropped from a high of 50% to it’s current 27% decline.

The better news is that new housing permits are rising for the first time in a year.  Permits usually are ahead of starts by around six months, so we are looking to see housing starts rise again in the short run.

This of course means that The Fed is going to be very careful in it’s upcoming regularly scheduled meeting, in fact the market is betting that The Fed will hold rates.  Bank of Canada will then also be in a position to hold rates.  Although we expect one more decline in the Bank of Canada’s hand that will be it.

As mentioned before the focus will need to switch to when will inflation come roaring in to bring the rates screaming back up.

Stay tuned

I think Yes.  If you look at the US who of course is leading the cause of all the rest of the housing turmoils globally then you would say we are climbing out.  Even though housing starts are at the lowest level in 17 years, but the good news is the rate of the decline has dropped from a high of 50% to it’s current 27% decline.

The better news is that new housing permits are rising for the first time in a year.  Permits usually are ahead of starts by around six months, so we are looking to see housing starts rise again in the short run.

This of course means that The Fed is going to be very careful in it’s upcoming regularly scheduled meeting, in fact the market is betting that The Fed will hold rates.  Bank of Canada will then also be in a position to hold rates.  Although we expect one more decline in the Bank of Canada’s hand that will be it.

As mentioned before the focus will need to switch to when will inflation come roaring in to bring the rates screaming back up.

Stay tuned

Rob Carrick from the Globe and Mail is at it again with a well written piece on inflation rising.  He is like a dog on a bone.  With this latest article he at least this time gives solid advice on what to do about it to hedge against it in your portfolio.

That is where the relevance to interest rates and mortgages come in.  You see if inflation goes up, particularly when they go up as fast as he along with CIBC World markets suggest, then the central bank will raise interest rates to combat this.  This is where it will hit variable rate mortgage customers who are not watching or don’t have their mortgage planners watching for them.  As for your investment portfolio according to the article you should stay out of long term bonds and go to Oil and Gold which are real commodities that will hold their value as prices rise.

Interesting sidebar was when they said what the current inflation rates were in other countries in the World, I had no idea and it is real scary as these developed countries have inflation like this then why is it so preposterous for Canada to go to 4% as Jeffrey Rubin from CIBC World market predicted earlier this week?

Europe: 3%

Russia: 12%

China: 8%