Intrest Rates ...on the rise?

[destro]

Could anyone shed some light on Intrest rates. Im Canadian but we basically mimick the US intrest rates. They have been going up over the last year but will they continue? What are the best indicators that influence the Prime rate? Wheere do experts believe the prime rate is going in 1 year..2 years..5 years..10 yeras..15-20 years.

Perhaps some good links?

Thx in advance..and yes I just bought a house /images/graemlins/grin.gif

i think baronness knows.

Here's the short version: interest rates will go up substantially in 1-5 years.

Short and long term interest rates are related, but can move separately. For the retail investor, short term rates influence the yields on money market accounts and bank savings accounts. Long term rates affect mortgage rates and thereby influence the housing market.

Short term rates are set by the Fed in order to best guide the US economy. All else being equal, higher short term interest rates decrease inflation and slow down the economy. So if inflation is growing (as it is now), the Fed will be more likely to raise interest rates. If the economy goes into a recession, the Fed will probably cut rates.

Long term rates are more complicated. An oversimplified way of thinking of them is that they are equal to short term rates plus a time-risk premium. If I lend you money and won't get paid back for 30 years, that's a bigger risk than if I get paid back tomorrow, and I'll need a higher interest rate to compensate for that risk. Other factors include the overall demand for credit. If, say, the US government continues to run up a big debt, it will add to the demand for capital, making companies, home-buyers, etc. have to pay higher interest rates on the money they borrow.

The combination of growing government debt and rising inflation means both types of interest rates will rise before too long.

[Girchuck]

Either the interest rates will rise, the US dollar will go down or both.
http://dollarcollapse.com/gates.php

[FishHooks]

From what I've heard the Fed rate will climb to about 4.5% its currently at 3.75% and stop as Bernake is taking over and from what I understand he's a big advocate of a target inflation rate and I believe he wont be adjusting rates like Greenspan was doing.