Wholesale Funding and Energy Portfolio Strategy

Households Can Sustain Higher Rates Real interest rates are still negative and will turn only mildly positive in 2019 • Scotiabank Economics expects the Bank of Canada to raise its target overnight rate an additional 125 bps by Q1/2020 • Average mortgage borrowers have only just begun renewing their loans at higher interest rates 6 8 % Further Rate Hikes Ahead from BoC & Fed 965432 1 0 93 98 Fed Funds Target Rate (Upper Limit) 03 forecast Вос Overnight Target Rate 08 13 18 Sources: Scotiabank Economics, Haver Analytics. Scotiabank® 47

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