Interest rates have a direct impact on everyone’s finances, whether it’s their mortgage payments, credit card bills or savings account. Interest rates hit 40-year lows in Canada and the United States early in 2004. Interest rates are based on the borrower’s underlying loans’ primary rates and do not include discounts for interest reduction benefits. Firms are worried that rising interest rates will continue to increase the strength of the pound against the US dollar, thus making life more difficult for exporters. Some two million Americans who took out adjustable rate mortgages will see their interest rates reset to a higher rate this year, and many cannot afford to pay the higher bills. Lower interest rates could also bolster consumers, since credit cards are often pegged to short-term rates. Typically, for every forecast of increasing interest rates there is a forecast of decreasing rates. The revised interest rates on deposits would be applicable only to fresh deposits and on renewal of maturing deposits. You see, long-term interest rates like the rates on fixed-rate mortgages are based more on expectations of the future than on what happens right...
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