Economic News & Possible Rate Changes - Next Year

In my last post I wrote about Brexit, and over the summer I went to the UK.  On my trip I met and spoke with a range of people, some horrified by the outcome and hoping the government will come back to voters with the results of what Brexit negotiations really will mean for the UK and seek another vote, others who made gobs of money after the results, and still others firmly happy with the results and looking forward to independence.  I hear some farmers though are a little uncertain the UK government will keep up the same subsidies they have been enjoying under the EU.  Nothing is negotiated yet, and the rest of Europe is fuming, quietly at this stage; I suspect they are still hoping for a new vote.

I also heard some speculation that one of the reasons the pro-Brexit leaders dropped off the radar so quickly after the vote was because they were, in part, funded by Russia as part of Putin's effort to weaken Europe.  Whether true, or not, it certainly will help Russia if the UK does fully withdraw in a few years time, as would a Trump win in November.  Like China, Russia is playing a long game.

I think the end result is that economies in many countries will be slow in general with bursts of up, flat periods, and maybe a little down, for some years to come, but I do not foresee sustained upside for some time.

The recent Bank of Canada announcement held rates steady at 0.5%, and I am sure I heard a news report that they are not expecting rate increases until well into next year.  While the 20-40 year old age group is having to deal with ever increasing housing prices in major markets, they will certainly have enjoyed almost a decade of historically low borrowing costs, never knowing the 10.02 - 19.41% average mortgage rates of the period between 1973 - 1992.  Yes, I did say 19.41%, it was the average 5 year fixed rate in March 1982 according the the Bank of Canada.  So each generation has had its challenges.

So, while the rates on offer to consumers may go up and down a bit as lenders compete for business, and balance that against boosting profits, people can still expect to get cheap money for the foreseeable future. Enjoy, and unless you are making big bets and investing in something you feel good about, take this time to pay off debts as soon as you can, it will make your future more relaxed, and if rates do go up it will not hurt as much.