Yes the Bank of Canada yesterday confirmed no rate increases in their key overnight rate., keeping it at 1% for September 2011.
No big whoop, right? It’s been like this for a few years now, but, read the following from the bank:
The global economic outlook has deteriorated in recent weeks as several downside risks to the projection in the Bank’s July Monetary Policy Report (MPR) have been realized. The European sovereign debt crisis has intensified, a broad range of data has signalled slower global growth, and financial market volatility has increased sharply. Recent benchmark revisions show that the U.S. recession was deeper and its recovery has been shallower than previously reported. In combination with recent economic data, this implies that U.S. growth will be weaker than previously anticipated. The Bank expects that American household spending will be even more subdued in the face of high personal debt burdens, large declines in wealth and tough labour market conditions. Fiscal stimulus in the United States will also soon turn into material fiscal drag. Acute fiscal and financial strains in Europe have triggered a generalized retrenchment from risk-taking and could prompt more severe dislocations in global financial markets. Resolution of these strains will require additional significant initiatives by European authorities. Growth in emerging-market economies has been robust, although its rate and composition will be affected by weakness in major advanced economies. While commodity prices have declined owing to diminished global growth prospects, they remain relatively high.
This does not sound like a financial recovery. Actually, it sounds more like a financial relapse. On the basis of this, the bank is of course leaving rates alone, and also they think inflation is at 2.0% right now (I disagree as does Stats Canada, but who are we to quibble).
The really weird thing about this, is now we have pundits that are predicting possible rate cuts?!? Holy crap on a cracker Batman, cuts? Yup, given how bad the U.S. economy is going Canada may have to lower it’s rates to keep from having a $1.50 Canadian Dollar, wow (I exaggerate but a Canadian dollar above parity with it’s U.S. counterpart is a very bad thing for the Canadian Economy as a whole).
Enjoy your loose money for a while longer, seems like we won't be getting any rate increases for a while? Don't know that for sure (and don't quote me either), but that seems to be what is implied!
Interest Rates 2011
- Interest Rates Stay the Same But Mortgages Rules Get Tighter 2011 Raising interest rates in 2011 really slowed down the Real Estate world. Tighter rules for mortgages were also introduced. No, they didn’t, interest rates dropped again, and the charlatans simply found other ways to get around the rules.
- Slutty Money from Canada The term “Slutty Money” refers to loose and easily available cash due to low interest rates and ongoing monetary stimulus in March 2011. This article examines how Canada’s Bank of Canada policies, particularly the Key Overnight Rate, impact inflation, household spending, and investments. With economic uncertainty, a slow return to normal interest rates is predicted, but nothing in the economy is truly predictable. The piece highlights concerns over inflation, export challenges, and the risks associated with an overly abundant money supply.
- Loose Money Continues in May 2011 for Canada Explore the May 2011 interest rate updates from the Bank of Canada and what they mean for your investments and savings.
- Bank Rates Hover in Canada Again Explore the July 2011 rates from the Bank of Canada as it maintains its overnight rate at 1%. Understand the implications.
- Loose Money Continues in Canada (Sept 2011) The Bank of Canada confirmed no rate increases, September 2011, keeping the key overnight rate at 1%. Explore the implications.
- No Rate Increases in Canada (October 2011) Explore the current interest rate set October 2011 by the Bank of Canada and its impact on borrowers amid inflation concerns.
- Low Interest Rates to End 2011 from Bank of Canada Stay informed about the Bank of Canada rates for December 2011 and what they meant for inflation and future mortgage options.
