Interest Rate Prediction vs Federal Election

Many banks have predicted the interest rate will continue to hike rapidly in year 2011. However I doubt it! The current prime rate is 3% at all Canadian major banks. With the federal election coming up this May, there is a huge chance the rate will not increase at all by the end of this year. Why? Interest rate is not only a sensitive financial issue but also a political one. Parties that propose to raise the rate will most likely receive fewer votes.

This would be good for home buyers. It’s probably a good idea to enjoy the low prime rate with variable rate rather than converting to fixed rate, if the prime rate is not gonna hike any time soon.

What is on your mind regarding this topic? Do you think the rate is gonna increase by the end of this year?

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