Ontario Agriculture

The network for agriculture in Ontario, Canada

http://www.vancouversun.com/sports/Bank+under+pressure+hike+rates/2... 

Pressure on the Bank of Canada to move early on raising interest rates mounted Monday after fourth-quarter data on gross domestic product suggested the economy is roaring its way out of the recession after recording the fastest pace of growth in nearly a decade.

The central bank could provide hints of a change today when it releases its latest statement on rates. Its plan for almost a year has been to conditionally keep its benchmark rate at 0.25 per cent until at least July in an effort to pump up economic growth after the recession.

Data from Statistics Canada suggested the emergency-level rates have worked their magic, perhaps faster and better than anticipated.

The economy expanded five per cent in the final three months of 2009, blasting past market expectations for a four-per-cent gain -- and the central bank's 3.3 per cent forecast -- and setting the stage for robust growth this quarter. It is also the fastest pace of quarterly economic growth since late 2000. Further, the data were solid almost across the board, with personal consumption and net trade contributing to the performance. Third-quarter data were also revised upward, with growth of 0.9 per cent as opposed to the original 0.4-per-cent reading.

This comes on top of January inflation data that indicated price increases had moved closer to the central bank's two-per-cent target earlier than anticipated.
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The big question I know for us - is when to pull the trigger and lock in our loans that are variable right now -- into fixed.

Anyone else is this situation? What are your plans?

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I have looked at this case many times. My findings are that over a 30 year period the variable always outperforms the fixed rate. I also work hard to overpay it whenever I can, as you get the principal down the risk of higher interest rates drops significantly.

I suspect inflation will start to run up. The price of oil has again risen, this is the real benchmark for everything. If the government really wanted to help they would consider a price ceiling for fuel.
How Changing Interest Rates Will Affect Ag

Video wiith analyst Philip Shaw (http://philipshaw.ca/) at the Western Fair Farm Show about how he thinks interest rates will affect agriculture markets in the medium term. WATCH VIDEO

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