Inflation is poised to surprise on the upside later this year, which will prompt the Bank of Canada to raise short-term interest rates by 1.5 percentage points, says Sheryl King, chief investment strategist for Merrill Lynch Canada.
The possibility of a run-up in rates, now pegged at 1 per cent, would lead to increases in the cost of many types of consumer debt, including the variable-rate mortgages popular with many homeowners.
Ms. King made the rate forecast following the investment bank’s global outlook conference in Toronto, where senior market analysts for the firm lauded a slew of natural resource stocks and one strategist made a high-profile prediction that the debt crisis now afflicting European governments will spread to the United States, an event that would cause both the euro and the Canadian dollar to soar.
Full Story @ http://www.theglobeandmail.com/globe-investor/investment-ideas/features/2011-market-outlook/merrill-warns-interest-rates-may-jump-by-year-end/article1867888/
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