Description: The major banks in Canada have raised their interest rates following the Bank of Canada’s third recent increase in its lending rate to 1.25%. With positive economic growth and healthy employment levels, the Bank of Canada believed it was a suitable time to raise rates. Lurking in the background, however, is the possibility of failure in the NAFTA trade talks. One economist, Avery Shenfeld, noted that the possibility of NAFTA going south “hints that the view out the front window isn’t quite as sunny.”
Date: January 17, 2018
1) Using the calculator attached to the CBC article, or a spreadsheet template of your own, determine how a 0.25% rise in the rates might impact payments on your student loans.
2) Have you been following any of the news around NAFTA? What do you think will happen?
3) What happens to bond prices when interest rates are rising?