Scotiabank Investor Day Summary

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 100 bps by end-2019. Average mortgage borrowers have only just begun renewing their loans at higher interest rates. Further Rate Hikes Ahead from BoC & Fed 5-yr Mortgage Rates Resetting Higher 50 9 5-yr difference, basis points % 0 8 7 6543 2 1 0 93 98 03 Fed Funds Target Rate (Upper Limit) -50 -100 forecast -150 ВОС -200 Overnight Target Rate -250 08 13 -300 18 Sources: Scotiabank Economics, Haver Analytics. 10 11 12 13 14 15 16 17 18 Sources: Scotiabank Economics, CMHC. Scotiabank 54

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