The Bank of Canada decided to keep their key overnight rate 1%, blah, blah, blah… you know the drill.
Things really don’t seem to be changing much this past little while do they?
Why are the rates staying the same? Here are some very good quotes from yesterday’s publication from the Bank of Canada:
“… The economic expansion in the United States continues at a gradual pace. Europe is in recession and its crisis, while contained, remains acute. In China and other major emerging economies, growth is decelerating somewhat more quickly than expected…”
OK, so the major markets of the world are not in very good shape, thus the danger of a massive spending spree (other than in China, where spending is slowing down), is not high.
“…In Canada, while global headwinds continue to restrain economic activity, underlying momentum remains at a pace roughly in line with the economyâ€™s production potential. Economic growth is expected to pick up through 2013, with consumption and business investment continuing to be its principal drivers, reflecting very stimulative financial conditions. Business investment remains solid. There are tentative signs of slowing in household spending, although the household debt burden continues to rise….”
Global headwinds? I really love that turn of phrase, but more interestingly is the increase in household debt burden is now being spoken about by the central bank? Must be pretty bad, I guess?
Does this mean rates are going to stay down for now? I think so, but if there is an actual economic up turn in North America, all bets may be off.
The graph stops at May, however, it is still the same as it was then, so you get the gist of things.