The Bank of Canada threw us all a knuckleball this week when they announced a quarter point drop of their key overnight rate (on Wednesday). The rate is now at 3/4% dropping a 1/4, and it seems the Bank assumes the economy needs even more stimulus.
The telling statement from their announcement is the final paragraph of their statement:
The oil price shock increases both downside risks to the inflation profile and financial stability risks. The Bank’s policy action is intended to provide insurance against these risks, support the sectoral adjustment needed to strengthen investment and growth, and bring the Canadian economy back to full capacity and inflation to target within the projection horizon.
This suggests that the very commodity reliant, Canadian economy is going to take a hoof in the “lower abdomen” thanks to plummeting oil prices. Lower inflation, but higher unemployment seems to be on the event horizon.
The Canadian dollar continues to plummet, thanks to very low oil prices, which may slow down the cross border shopping insanity that has been going on for the past little while. Maybe we shall see more of our American family dropping by in Canada this summer? Is this lower interest rate simply going to accelerate the drop of the Dollar’s value? Some experts feel this is going to cause a Canadian dollar back around the 70 cent level (compared to the US dollar), we shall see whether that comes to pass.
My Writings for Week Ending January 23rd
The cold of Ottawa in January constantly begs the question, why do we live here? :
- I had another run at some of the Best Financial Tweets of the week. I thought I wasn’t going to be able to find many, but the real problem is, there are too many, and my Twitter feed is too large (I miss far too much).
- I did finally get my money out of the TD RESP account for my daughter, but it took longer than I wanted and I highlight the issues I created by trying to use lower MER Mutual funds with TD E-series RESP Bear Trap.
- How do you eat an elephant ? Here is an idea, don’t order the frigging elephant!!
- RESPs are too hard for Mommies? My regular readers could spot the Swerve title, but I am just not too sure why I have seen so much mainstream media (TV) pushing this Giraffe & Friends RESP thing, and yes, Mrs. C8j was really quite insulted by the pitch.
Click here for more interesting finance articles