During the council meeting on Monday night in Smiths Falls, council discussed the renewal of loans for the Pelletizer at the Wastewater Treatment Plant, and the police building on Air Care Drive. These loans, which have a balance of $531,000 and $1,580,000 respectively, are up for renewal.
RBC, which provided the loan, offered council a selection of rates based on a fixed term, or a one-year variable rate, for the remaining loan.
Mayor Pankow spoke up in favour of choosing a shorter fixed-term interest rate. “Rates are at a decades-long high. There is some expectation that they will come down, but I would be very hesitant to lock in for 10 years at a decades-high point. …I tend to expect we would be rewarded by waiting for a year; I would be really hesitant to go long term on this.”
Councilor McKenna was in agreement with the mayor. “As far as interest rates, I think the term they’re using around the world is Polycrisis – there’s war, climate change, tremendous instability, strange elections around the world, and what will happen to interest rates? It’s not a real stable environment that we’re living in. It’s a tough one to try and guess.” McKenna asked CAO Morris for any advice in the matter.
“The crystal ball isn’t as clear as one would like it to be,” CAO Morris replied with a chuckle, “I think all the indicators suggest it’s going to drop. My suggestion would be, give the economy a chance to correct for maybe 2-3 years.”
Council decided to select a 2-year fixed-term rate of 5.71% in the hopes that the currently high interest rates will settle over the next few years, although, Councillor Brennan pointed out, one might as well throw darts at a wall and see where it strikes to try to predict interest rates.