Don't believe the interest rate hype - MoneySense

Don’t believe the interest rate hype

BMO bond manager not worried about interest rate hike.


BMO’s Mark B. McMahon says that the recent fretting about interest rate hikes is exaggerated.

“We’re not embarking on a two-or three-year cycle of higher interest rates,” the lead manager of the $1.5-billion BMO Bond tells the Toronto Star’s Michael Ryval. McMahon figures instead that after an attention-grabbing initial rate hike, Carney will be cautious about bringing up rates for fear of pushing the loonie too far above parity with the U.S. dollar.

Alternatively, he says, the Bank of Canada may wait to see what the U.S. Federal Reserve does, in which case McMahon doesn’t expect any action until the end of this year or the beginning of 2011, and even then, “the U.S. economy cannot handle higher rates.”