Interest rates are low because of demographics — an aging population of savers creates a borrower’s market

The Bank of Canada apparently surprised the chattering classes and everybody else this week by dropping its benchmark interest rate. The element of surprise, of course, reflected the firmly held convictions by Bank economists, and it would appear many others, that interest rates are now abnormally low and will soon return to more normal levels. In truth, it is the continuing hope/prediction/wish that interest rates would, will or should go higher that is surprising.

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