The following text may have been generated by Optical Character Recognition, with varying degrees of accuracy. Reader beware!

Page THE HERALD Wednesday September 1989 Interest rates could raise despite lower US rates Diane Matey Your Business Dunoon Kiwi Street Falling interest rates south of the border and signs of economic slowdown have led forecasters to predict with confidence that Cana dian rates will fill substantially over the next few months Many think a decline is long overdue Wood Gundy for example ex pects the prime business lending rate to fall from per cent to 75 per cent by December and 11 per cent by next June The prime is the banks benchmark business lending rate But conventional v is seldom right At least one economist thinks the could actually a full percentage point before long David Marshall of MMS International bases his belief on the strong demand for credit in Canada The possibility that he could be right is forcing borrowers and lenders to rethink their strategies The case for higher interest rates is supported bj a recent For tune magazine forecast Fortune s economists say the S Federal Reserve Board will soon begin to tighten the money supply again as inflation proves more tenacious than policy makers had thought A smaller supply of money will raie its price or interest The Federal Reserve is the American counterpart of the Bank of Canada PRESSURE IS OF If US rates begin to climb again the pressure will be otf John Crow govemoi of the Bank of Canada to lower rates in Canada Mr Crow will be able to point to the American experience to defend his high rate policy Rather than raising rates substantially Mr Crow is likely to keep them steady to slightly higher The reason is simply that the Canadian economy cannot withstand much higher borrowing costs Overshadowing the interest rate outlook is the mountain of debt that overhangs North American government business and con sumers In Canada household debt stands at a record per cent of household income not a healthy situation The question Mr Crow is ponder in his struggle with inflation is how much can he squeeze us without tipping the economy into rt cession OFFICE MAGIC FOB ALL YOUR OFFICE STATIONERY NEEDS SL Georgetown Simon CHARTERED ACCOUNTANT Phone Main Street South Georgetown Ontario 8770109 Another reason Canadian rates could stay high is the vulnerability of the Canadian dollar on foreign exchange markets True the dollar is stronger than it has been in a That just akes it all the more vulnerable TRADE WORSENS Undermining the dollars strength is our worsening trade position Net exports are shrink ing A shrinking trade surplus adds to the traditional current account deficit spelling trouble for the dollar The current account includes goods and services such things as dividend and interest payments to foreigners Given that most expect rates to fall what is likely to hap pen if they stay relatively high or rise even further So far most of the pressure has been on short term rates This is likely to continue Longerterm rates will seem low by comparison If rates hold fairly steady spen ding will continue to slow But if interest rates nse another point or so we could be in for a much more severe recession than the softlanding we are now enjoy ing It could hit late next year or early in 1991 If it does interest rates will drop dramatically CALL US AND WELL TELL YOU HOW TO PROTECT YOUR HOME YOUR CAR AND YOUR LIFE Liberty Mutuals got you covered with complete protection for all your insurance needs at very competitive rates Liberty Mutual Insurance Company Queen St East Brampton Ontario L6V 1B2 4548680 CANADA IN LIBERTY MUTUAL INSURANCE LIBERTY MUTUAL Chambers says play ball More than 2 members of Chambers of Commerce from around the Golden Horseshoe will converge on the SkyDome Friday Sept for the game between the Toronto Blue Jays and the Cleveland Indians This is a first said Hills Chamber of Commerce dent Dave Page Although we have traditionally cooperated with other chambers in the past to develop programs policies and events which we believed would be beneficial to our Halton Hills business community this is the first time for a social event such as this In addition to the Halton Hills Chamber of Commerce the follow ing chambers will be sending representation Burlington Brant ford Brampton Cambridge Belleville Elmira Hamilton Peterborough Flam borough Milton Niagara Falls Oakville Stoney Creek and Whitby Every year many of us are able to get together at the Annual Meetings or the Ontario and Cana Chambers of Commerce for an exchange of views and ideas said Dave Page and our staff are able to do this same through their own professional management associations but this is different For further information contact Doug Pennce of the Hills Chamber of Commerce at 7119 STEVEN C FOSTER BALLB BARRISTER SOLICITOR 37 MAIN ST SOUTH GEORGETOWN ONT L7G3G2 tel fax Panasonic xT3880iVKw Communications Inc a Street Georgetown Ontario 8733310 SUMMER MondayFriday am Saturday FOLDER TABS Hank K Hard C42 Soil TELEPHONE MESSA B ea Snap lata tar Mty removal original SupfrongbWingJoprtrrt 3 HOLE PUNCH Atfutlabto punch adutta any or holt combination PunchMuptalOOwalaolpaparatatlma hot 1189 ea SPEEDFRAME O4M ea Converts file drawer for use with folders Can be adjusted for letter or legal size