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Today: 20.01.2018 - 15:12:31
   Canada Mortgage Hub Discussion Board -> Mortgage Rates Canada -> If inflation in the US goes upto 10% will this affect interest rates and inflation in Canada and if so why?
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nrundquist

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If inflation in the US goes upto 10% will this affect interest rates and inflation in Canada and if so why?
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priscillayonarta

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The answer is that yes it will affect Canada, but you're worrying about the wrong thing.Canada is heavily dependent on the U.S. About 80%of Canadian exports go to the U.S. and about 55% of imports come from the U.S. So anything that happens to the U.S. economy is going to affect Canada._https://www.cia.gov/library/publications…U.S. inflation goes up, people buy less, so people buy less from Canada, so Canada's economy is hurt. But, even without inflation, U.S. unemployment goes up, people buy less, so people buy less from Canada, so Canada's economy is hurt.Canada exports oil to the U.S. Oil prices have fallen. So Canada will make less money as a result of the economic downturn.Canada exports lumber to the U.S.. Housing starts have dropped, so Canada is selling less lumber to the U.S. as a result of the housing bubble burst.etc.Canadian interest rates are set by a combination of the state of the Canadian economy (when it is booming, the central bank should be raising interest rates, and vice versa) and the outside world.Given the current state of the world, there seems to be no obvious reason why Canadian mortgage interest rates should go up. But if Canada starts seeing a real estate boom like the U.s. had, then the Canadian central bank should raise interest rates sharply.And, of course, a great deal depends on the success of the rescue plan, both in the U.S. and around the world and on what happens to the U.S. economy.What all this means for your interest rates in 2009, that I can't really predict.
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psmdelin

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Yes, our economies are closely intertwined..
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