BOC Cuts Rate
- Thread starter SkyRider
- Start date
Yes, and a boon for spenders. Which is the point. Encouraging spending spurs growth. A lower CAD also spurs growth through exports. It was the right move.
BOC in panic mode. Joe Oliver was in denial or faking it when a week ago he stressed Canada not in recession which is true statistically not yet 2 consecutive qtrs of decline but it is already cruising in recessionary lane.
Lower rates and lower CAD may not necessary help much. The whole world is banging on a sustained US recovery. All have been keeping interest rates low, some even cutting rates the past 1-2 months which further weakened their currencies hoping to stimulate investments and exports.
Lower rates and lower CAD may not necessary help much. The whole world is banging on a sustained US recovery. All have been keeping interest rates low, some even cutting rates the past 1-2 months which further weakened their currencies hoping to stimulate investments and exports.
Sounds like, technically speaking, Canada will enter a shallow recession. However, this is focused almost entirely on the commodities sector. If you're outside that industry, I don't think you have anything to worry about.
Unless you want to vacation in the States!
I don't think the non oil sectors are immuned.. Other key sectors are interconnected to the commodities complex. There will be a slow mo negative snowball effect. Real estate will get further trajectory deeper into bubble sphere.
I would like to thank the BoC for giving me a big raise. When I transferred to my firm's US office last year my salary was converted to USD at a rate over 90 cents, plus some adjustment, but mostly just converted. Now it's what, 76 cents and dropping? That's a 17% raise in the currency I will likely retire in.
Ok, so the BoC rate has been reduced. Next step is to see how much of this the financial institutions pass on. Remember, last time it was only a 15 bps reduction in the Prime Rate rather than the full 25 bps in the BoC reduction.
If rates are reduced, then you might see the feds follow up with an increase the minimum down payment for a house purchase from 5% to 10%. If this happens, it's going to really hit the first time home buyer market and the effect on house prices might then actually be negative.
Just sayin'
If rates are reduced, then you might see the feds follow up with an increase the minimum down payment for a house purchase from 5% to 10%. If this happens, it's going to really hit the first time home buyer market and the effect on house prices might then actually be negative.
Just sayin'
F-ing TD bank tried to get away with that, which is exactly what I thought they'd do. They only caved because the other banks undercut them.
Here's the question: When the rates get raised again by .25 in the future, will the banks only go up .15 like their reduction? Or will they go up the whole .25?
Last July when oil was over $100 a barrel and the prices slid to under $50 in January did the oil companies cut the price of gas in half?
The BOC rate cut will encourage spending to strengthen the economy, but it will also encourage house buying pushing up housing prices further. When rates climb this may cause the start of the bust of the extended, over heated housing bubble
I think the start of the bust will come when they raise rates again. My guess would be early to mid 2016.
