Get ready for interest rate shock in 2015
2015 is expected to be the first time in five years that benchmark interest rates are moved upwards, increasing the cost of borrowing. The U.S. Federal Reserve will go first; the Bank of Canada is expected to follow.
Most analysts expect the Fed to increase its key rate, which has been near zero for six years, by a quarter of a percentage point in the spring. Then, unless there is an unexpected shock to the U.S. economy, it will likely boost it gradually throughout the year, though the top rate is still expected to be a modest 1.25 to 1.50 per cent by the end of the year.
Canada will almost certainly follow, though with a time lag, depending on the state of the economy here.
Whenever it happens will be a shock to people carrying consumer debt, says Lynnette Purda, an associate professor at the Queen’s School of Business.
…click on the above link to read the rest of the article…
