From Financial Post · Robert McLister · · 1m
Why economists get interest rate predictions wrong
Economists often mispredict interest rates despite market signals.
In brief
Economists often mispredict interest rates despite market signals. Economists typically mispredict interest rates; bond markets better indicate future rate moves. Originally reported by Financial Post.
Economists' rate predictions
Economists often mispredict interest rates despite market signals.
Bank of Canada rate hike
Bank of Canada raised interest rates in 2026 despite economists predicting no hikes.
Economists' confidence
Economists had high confidence in rate predictions but poor track records.
Market signals
Bond markets predicted rate hikes months before economists.
Forward curve
Forward curve showed 75 to 125 basis points of rate tightening over 12 months.
Economists' mistakes
Most economists predicted no rate hikes despite market signals.
Scotiabank's accuracy
Scotiabank economists predicted rate hikes in 2026 ahead of others.
Mortgage advice
Floating mortgages work better than fixed rates except at major inflection points.
Rate cycle management
Monitor two-year government bond yields to manage mortgage risk.
Key takeaway
Ignore economists' rate predictions; follow bond market signals instead.
The one thing
Economists typically mispredict interest rates; bond markets better indicate future rate moves.
