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Message from the President
Protect Yourself from Falling Interest Rates: Lock in your Money now
The subprime mortgage crisis is proving to be more serious than first thought. Analysts across the globe have been forced to revise the growth forecasts they put forth in late 2007.
The Canadian economy will continue to grow, but the forecast US recession will hit us harder than anticipated. It is widely expected that the Bank of Canada will announce further cuts to interest rates in April, following the recent cuts by the US Federal Reserve.
Protect your interest income by moving excess cash from variable rate products, like chequing and savings accounts, to fixed rate products, like GICs. Locking in your interest rate now will enable you to bridge the upcoming period of low interest.
Stephen A. Tomchishin, President
Spring 2008 Economic Outlook
The continuing effects of an economic slowdown in the US are beginning to spillover and affect the Canadian economy as well.
Worsening Economic Crisis in the US
The US economy is showing signs of a more prolonged slowdown than first projected by economists. The recent cut by the US Federal Reserve confirms the liquidity crisis is worsening and that a potential credit crunch in the US is on the way.
Economists predict the result will be a significant drop off in US consumer spending with an ensuing drop off in cross-border trade.
Predictions regarding exactly when the US recession will end vary. However, the recently enacted US economic relief package that includes tax rebates for individuals and businesses is expected to provide some lift to the US economy by the second half of 2008.
The Impact of the US Recession
Canada's healthy economy and fiscal standing should help it withstand any future global turbulence, but economists still feel external risks will pose a challenge. The deterioration in economic and financial conditions in the US is expected to have spillover effects on the global economy.
While domestic demand has remained strong, underpinned by strong commodity prices, net exports took a blow in Q4 of 2007 due to the soaring loonie and less demand from our trading allies to the south.
Canadian Outlook
As US consumer spending slows, economists expect to see the impact on trading expand beyond the already hard hit pulp and paper, tourism and automotive industries. Approximately 40% of the Canadian economy is export related, with the US absorbing more than three-quarters of all Canadian exports.
Canadian economic growth is predicted to fall between 1.8% and 2.5% this year; however, analysts warn there is a risk of an even sharper downturn as weakness in the US economy spreads beyond the housing sector.
Interest Rate Forecast
In March, the Bank of Canada cut the overnight lending rate by one-half of a percentage point to 3.50% to curtail the rising Canadian dollar. It is widely anticipated that in late April the Bank of Canada will announce further cuts to the overnight rate, perhaps by as much as 0.50%.
Look for interest rates to rebound by the end of the year. The safest bet is to lock in for a one-year term prior to the 15th of April.
Contact William J. Rhind & Associates today to learn more simple strategies for maximizing your money.
About William J. Rhind & Associates
Benefit from our experience helping over 400 other small businesses negotiate tailor-made services for their financial operations. We’re here to offer practical advice, competitive interest rates, and convenient time-saving services.
Visit us online at at www.wjrhind.com or contact Colin McGilvery at (403) 283-1378
your money deserves more interest
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