Investors should brace for the possibility that interest rates will stay higher for longer
If someone challenged you to sum up the key trend of the past 40 years in financial markets, you could do so in a single three-word sentence: Interest rates fell.Most notably, it provided a tremendous boost for financial assets of all types. This wasn’t magic. It was just math. Any investment that promises to deliver a steady, reliable return becomes more valuable as interest rates decline.
Until the past year and a half, that is. The Bank of Canada’s key overnight rate has spiked from near zero to five per cent in recent months as policymakers have propelled borrowing costs higher to containSo what happens now? Conventional wisdom says the emergency will pass. Inflation will fade and so will the need for higher interest rates.
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