Quote:
Originally Posted by Jedi Ninja
The thing is, 5 year fixed rates have less to do with what the key overnight rate is as set by the government (and/or prime rate), and more to do with what the rate is on 5 year bonds. Just because the government has committed to keeping the overnight rate at 0.25% doesn't mean that the 5 year rate will stay where it is now.
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I see... I didn't realize that. What would cause the 5 yr bond rate to go up in the next 12 months?
One question though... why did all the 5 year rates drop a day or so after the Bank of Canada dropped its prime rate? It does seem like there is some correlation there.