As you can read below the market is suggesting that an increase of 25bps in the Bank of Canada rate, and therefore bank Prime rates, will take place tomorrow. There is also speculation that another increase of 25bps will be taken in May at the next meeting of the Bank of Canada. This will also mean some increases in fixed rate mortgages of almost equal amounts, so expect rates to continue to increase through May.

This gives you an opportunity to benefit from a rate hold in the form of a pre-approval (even if approval is not an issue).


BoC decides
ALLAN ROBINSON
Friday, April 21, 2006
Bond, currency and stock markets could be volatile this week as earnings season ramps up and the Bank of Canada offers some signals whether it may pause in its rate-hike cycle.
The central bank is forecast to increase its target rate for overnight loans for the sixth consecutive time by a quarter percentage point to 4 per cent tomorrow and release its monetary policy report on Thursday.
“The Bank of Canada's own statements do not suggest that it has much of an appetite for an overnight rate of more than 4 per cent,” said Marc Lévesque, chief foreign exchange and fixed-income strategist for TD Securities Inc.
Domestic economic growth is in line with its potential, inflation has not been a problem, and the central bank remains concerned that global growth could slow in 2007, he said.
Still, bond investors are leaning the other way. “Basically the market is pricing in two hikes,” said Mr. Lévesque. “There's a pretty broad range of views.”
Some investors in the bond futures market in Canada are still looking for another rate increase in May, so if the central bank does signal this week that it might stop increasing rates for now there could be volatility in bond future prices, said Stewart Hall, the currency and fixed-income strategist for HSBC Securities (Canada) Inc. He estimates the yield on bankers' acceptance futures could fall at least 15 basis points. (A basis point is 1/100th of a percentage point.) Over the past few days, bond traders have re-priced the market indicating an increased likelihood that the central bank might indicate that it sees the inflation risks as being well contained, he said.