September 9, 2015 - Bank of Canada maintains overnight rate target at 1/2 per cent
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September 9, 2015 - Bank of Canada maintains overnight rate target at 1/2 per cent

This is a discussion on September 9, 2015 - Bank of Canada maintains overnight rate target at 1/2 per cent within the Dominion Lending Centres - Clear Trust Mortgages forums, part of the Corporate Sponsors category; Bank of Canada maintains overnight rate target at 1/2 per cent Link: Bank of Canada > Press > Press Releases ...

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    Forum Beginner herefishyfishy's Avatar
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    DefaultSeptember 9, 2015 - Bank of Canada maintains overnight rate target at 1/2 per cent

    Bank of Canada maintains overnight rate target at 1/2 per cent

    Link:
    Bank of Canada > Press > Press Releases > Bank of Canada maintains overnight rate target at 1/2 per cent

    Here are the most recent changes to the Bank of Canada prime rate (aka the overnight rate):
    - June to September 2010: 3 x 0.25% increases, prime rate changed from from 0.25% to 1.0% (0.75% total increase)
    - January 21, 2015: lowered from 1.0% to 0.75% (0.25% decrease)
    - July 15, 2015: lowered from 0.75% to 0.50% (0.25% decrease)


    The next scheduled date that the Bank of Canada will announce their overnight rate target is Wednesday October 21, 2015.
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    Find out how a licensed mortgage broker can be an advantage for securing a better mortgage:
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    An interesting study from the Bank of Canada on mortgage discounting.

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    Forum Beginner herefishyfishy's Avatar
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    Here are some excerpts from the recent Bank of Canada key interest rate announcement on September 9, 2015:

    Total CPI inflation remains near the bottom of the target range, reflecting year-over-year price declines for consumer energy products. Core inflation has been close to 2 per cent
    The stimulative effects of previous monetary policy actions are working their way through the Canadian economy.
    Canada’s resource sector continues to adjust to lower prices for oil and other commodities, with some spillover to the rest of the economy.
    Economic activity continues to be underpinned by solid household spending and a firm recovery in the United States, with particular strength in the sectors of the U.S. economy that are important for Canadian exports.
    Increasing uncertainty about growth prospects for China and other emerging-market economies, ... has contributed to heightened financial market volatility and lower commodity prices.
    Movements in the Canadian dollar are helping to absorb some of the impact of lower commodity prices and are facilitating the adjustments taking place in Canada’s economy. While the overall export picture is still uncertain, the latest data confirm that exchange rate-sensitive exports are regaining momentum.
    Find out how a licensed mortgage broker can be an advantage for securing a better mortgage:
    http://www.andrewleung.ca - Licensed Mortgage Broker, Mortgage Pro"fish"onal!

    An interesting study from the Bank of Canada on mortgage discounting.

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    Forum Beginner herefishyfishy's Avatar
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    Here is what our Chief Economist, Dr. Sherry Cooper had to say (direct link):

    NO SURPRISES FROM THE BANK OF CANADA

    As expected, the Bank of Canada refrained from cutting interest rates at today’s policy meeting. The recent economic news has shown a marked improvement, precluding the Bank from following on the previous two rate cuts this year. The key policy overnight rate is only 50 basis points (one-half of one percentage points) and another 25 basis point (bp) cut would only reduce the Bank’s ability to take action, if needed, in the future.

    The slowdown in the Canadian economy in the first half of this year had nothing to do with interest rates and had everything to do with the massive decline in oil prices. As the Bank has noted, “financial conditions are accommodative and provide considerable support to economic activity”.

    In addition, a 25 bp rate cut would only translate into a 12-to-15 bp cut in mortgage and other consumer and business borrowing rates, as we have seen with the January and July cuts. The reason is the cost of funds for the lenders has risen relative to risk-free government five-year bond yields–normally linked to mortgage rates–as investors risk appetites have declined. This rise in so-called credit spreads reduces the stimulative effect of any rate cut by the Bank of Canada.

    Moreover, the interest-sensitive sectors of the Canadian economy–housing, autos and other durable goods purchases–are already booming. Business investment has declined sharply, but only in the oil patch, which would not be reversed by lower interest rates. Another rate cut would only encourage increased household indebtedness and, at the margin, make little difference.

    The good news is that the U.S. economy has rebounded sharply from the first quarter slowdown, with second quarter growth of 3.7 percent surprising on the high side. This has helped to boost Canadian exports, particularly for autos and aircraft. As the Bank expected, the weaker Canadian dollar has spurred the demand for Canadian products in the U.S. and elsewhere.

    To be sure, the Chinese economy has slowed, putting downward pressure on certain commodity prices important to Canada’s exports, but the pick up in the U.S. has finally provided a meaningful offset.

    The Bank of Canada is at last seeing the stimulative effects of its earlier rate cuts and is confident that the five-month decline in economic activity has halted with the stronger-than-expected 0.5 percent growth in June. The increase in June was broad-based. Also, more recent data show a strong uptick in employment growth. Third quarter GDP growth is in train to meet or exceed the Bank’s forecast of 2.5 percent, a welcome reversal of the first-half slide.

    While core inflation has been about 2 percent, the Bank judges that the underlying trend in inflation remains at about 1.5 to 1.7 percent.

    To be sure, the heightened volatility in financial markets, the slowdown in emerging economies and the potential further decline in oil prices will keep the Bank ever watchful. If the rebound in economic activity peters out later this year, which I doubt, the Bank will act quickly to cut rates once again. The next policy announcement date is October 21, just two days after the Federal election.
    Today's interview with Business News Network (BNN):

    Bank of Canada kept interest rates unchanged Wednesday, in line with economist expectations. Sherry Cooper, Chief Economist, Dominion Lending Centres says although Canada’s economy is currently a mixed bag, there are some signs that it is on its way to gradual growth.
    Find out how a licensed mortgage broker can be an advantage for securing a better mortgage:
    http://www.andrewleung.ca - Licensed Mortgage Broker, Mortgage Pro"fish"onal!

    An interesting study from the Bank of Canada on mortgage discounting.

 

 


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