Thank you Dr Cooper!
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General Bob Rees 15 Dec
Thank you Dr Cooper!
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General Bob Rees 13 Dec
Thank you to our preferred partners at First National for the below insight 🙂
The Bank of Canada has made its final rate announcement of the year and it ended where it started – holding at 0.25%.
The December announcement stuck pretty much to the same script as the last announcement in October (there is no setting in November):
Market watchers tend to be characterizing the latest announcement as a wait-and-see approach. The Bank also repeated, it did not expect to move on interest rates until the “middle quarters” of 2022. Current thinking is, that means April rather than June. There is no setting in May.
Speculation about a January increase, triggered by last month’s strong jobs report, seems to have been silenced.
One factor to keep an eye on is U.S. inflation. It hit a 40-year high of 6.8% last month, sparking calls for the U.S. Federal Reserve to intervene. If the Fed were to respond with a rate hike to tamp down inflation it could open the door to a similar move by the BoC. But good economic growth on both sides of the border and the uncertainty brought by the omicron variant of COVID make early rate increases seem unlikely.
General Bob Rees 9 Dec
Hot off the press! The Bank of Canada met today and below is a link to their decision. In summary, Prime Rate was unchanged and their next meeting will happen in the short term on January 26, 2022. If you have a variable mortgage or line of credit, this is great news (no change) as your rate remains unchanged. I am here if any questions arise and enjoy your day!
The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank’s extraordinary forward guidance on the path for the overnight rate is being maintained. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds roughly constant.
The global economy continues to recover from the effects of the COVID-19 pandemic. Economic growth in the United States has accelerated, led by consumption, while growth in some other regions is moderating after a strong third quarter. Inflation has increased further in many countries, reflecting strong demand for goods amid ongoing supply disruptions. The new Omicron COVID-19 variant has prompted a tightening of travel restrictions in many countries and a decline in oil prices, and has injected renewed uncertainty. Accommodative financial conditions are still supporting economic activity.
Canada’s economy grew by about 5½ percent in the third quarter, as expected. Together with a downward revision to the second quarter, this brings the level of GDP to about 1½ percent below its level in the last quarter of 2019, before the pandemic began. Third-quarter growth was led by a rebound in consumption, particularly services, as restrictions were further eased and higher vaccination rates improved confidence. Persistent supply bottlenecks continued to inhibit growth in other components of GDP, including non-commodity exports and business investment.
Recent economic indicators suggest the economy had considerable momentum into the fourth quarter. This includes broad-based job gains in recent months that have brought the employment rate essentially back to its pre-pandemic level. Job vacancies remain elevated and wage growth has also picked up. Housing activity had been moderating, but appears to be regaining strength, notably in resales. The devastating floods in British Columbia and uncertainties arising from the Omicron variant could weigh on growth by compounding supply chain disruptions and reducing demand for some services.
CPI inflation is elevated and the impact of global supply constraints is feeding through to a broader range of goods prices. The effects of these constraints on prices will likely take some time to work their way through, given existing supply backlogs. Gasoline prices, which had been a major factor pushing up CPI inflation, have recently declined. Meanwhile, core measures of inflation are little changed since September. The Bank continues to expect CPI inflation to remain elevated in the first half of 2022 and ease back towards 2 percent in the second half of the year. The Bank is closely watching inflation expectations and labour costs to ensure that the forces pushing up prices do not become embedded in ongoing inflation.
The Governing Council judges that in view of ongoing excess capacity, the economy continues to require considerable monetary policy support. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank’s October projection, this happens sometime in the middle quarters of 2022. We will provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation target.
The next scheduled date for announcing the overnight rate target is January 26, 2022. The Bank will publish its full outlook for the economy and inflation, including risks to the projection, in the Monetary Policy Report at the same time.
General Bob Rees 30 Nov
Thank you Dr Cooper for the insight!
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General Bob Rees 17 Nov
Why does it feel like a carton of eggs and a litre of milk costs $100 these days? …….. Dr Cooper explains
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General Bob Rees 15 Nov
Thank you Dr Cooper!
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General Bob Rees 8 Nov
Thank you to our preferred parnters at First National!
The Bank of Canada is clearly signaling its intention to raise interest rates as early as the middle of next year. That has many market watchers forecasting a surge in home purchases and prices in the coming months. The analysts expect to see a scramble of home buyers trying to lockdown their deals before the rates rise.
However, in a recent report, Moody’s Analytics lays out the case for price stabilization and slower price growth, based mainly on the premise that supply and demand will fall back into line.
The report cites Canadian Real Estate Association data that shows existing-home sales fell for the fifth straight month in August. At 587,000 annualized units, sales are down 27.5% from the peak reached in March. CREA has also forecast a slowdown in price growth. The association expects prices to rise by 5.6% in 2022, a significant pullback from the nearly 20% increase projected for this year.
Moody’s points to declining housing starts and a contraction in the value of building permits being issued as further signs the market is cooling. Although both of those measures remain high compared to pre-pandemic levels. As well, the pandemic caused a slowdown in home completions which contributed to supply shortages. As those homes are finished and hit the market, over the next year, the shortages should start to ease. Moody’s also believes the pandemic-inspired surge in demand has largely played out. Further, it expects the Bank of Canada’s pending interest rate increases to drag home price appreciation to a near standstill through 2022 and 2023.
The report says price growth should be re-invigorated by the end of 2023 as population growth, immigration and “a nearly healed labour market re-energize wage and salary growth.”
General Bob Rees 5 Nov
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General Bob Rees 25 Oct
With growing expectations that the Bank of Canada is going to move ahead with interest rate increases in the second half of next year, concerns are building about affordability, debt and the standard of living in Canada.
The household debt-to-income ratio has been a serious economic concern in this country for several years. The latest “Affordability Index” produced by debt services firm BDO Debt Solutions suggests the pandemic may be contributing to that problem.
The survey indicates 43% of the people who took part – and who have debt – increased that debt due to the pandemic, up 4% from last year. It also shows that 26% of respondents incurred at least one new type of debt. For more than a quarter of them, it was credit card debt.
Of all the respondents with a new type of debt, 70% say it has caused their standard of living to decrease. Just 10% of that group feel confident they will be able to get back to their pre-pandemic standard of living.
House prices have jumped sharply during the pandemic. Despite hectic sales, the survey suggests 45% of Canadians are facing affordability barriers to home ownership, a 7% increase year-over-year.
Three-quarters of the respondents aged 35 to 54, who do not own a home, say they are unlikely to buy in the next three years. Nearly half of the respondents – of all age groups – who say they are unlikely to own a home in the next three years indicate they are unable to save enough for a down payment.
General Bob Rees 20 Oct
We can all relate to the recent rise in inflation …. it seems like s jug of milk and a loaf of bread coast $30 these days. Below explains …..
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