Rates Still at 1% Overnight Rate for Bank of Canada, September 2012

in Bank of Canada, Bank Rates, Inflation, Interest Rates

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 economy‚Äôs 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.

Bank Rate (overnight) Since 2002, Pretty Low eh? And the Beat Goes On….

The graph stops at May, however, it is still the same as it was then, so you get the gist of things.

{ 4 comments }

  • Tony September 8, 2012, 3:06 PM

    Basically, Canada does what the U.S. does. (I’m in no way criticizing us Canadians, as I love my country too).

    Reply
  • Joe September 6, 2012, 7:26 PM

    The housing market is collapsing (Vancouver prices down 10%+; Toronto downtown condo sales collapsed 34%) — and rates haven’t even gone up yet. Just wait. Our economy has been hollowed out. We don’t manufacture stuff. We consume, borrow, and buy real estate. The reckoning cometh.

    Reply
    • bigcajunman September 6, 2012, 7:29 PM

      But at least it will give us Bloggers plenty to write about.

      Reply
    • Elle P. September 8, 2012, 8:58 PM

      We’ll be fine. It’s not “collapsing,” it’s deflating, and it’s a good thing; houses in key areas were overvalued. It’s also intentional…Flaherty didn’t want Canadian spending to decrease anywhere except for real estate. So what did he do? New mortgage rules.

      If he thinks Canada’s gone too far in consumer debt, he’ll raise the interest rate. As long as he’s not evil, we’ll be fine.

      Reply

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