by Simon Giannini
With all the uncertainty surrounding many of the world’s economies at the moment, there was a semi-sure bet- that they Bank of Canada would stay put, given the strength of the headwinds blowing against our borders.
Yet again, Mark Carney is holding the overnight rate at 1 %. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The Bank of Canada said in a release, “Uncertainty around the global economic outlook has increased in the weeks since the Bank released its October Monetary Policy Report (MPR). Conditions in global financial markets have deteriorated as the sovereign debt crisis in Europe has deepened. Additional measures will be required to contain the European crisis. The recession in Europe is now expected to be more pronounced than the Bank had anticipated in October, as a result of increased deleveraging and tighter financial conditions, as well as necessary fiscal austerity and structural reforms.”
It isn’t just the Eurozone that is experiencing turbulence. Employment data released last week from Stats Can with an unexpected job loss suggests that economic conditions may not be as favourable as one might have thought a few months ago. Seemingly, employers are beginning to lose confidence are showing an unwillingness to hire.
The figures were not completely unexpected though, as the BOC had cautiously predicted sluggish growth, at best through the end of this year, and early next.
On the upside, inflation targets are coming closer to target levels, but not enough to counterbalance the threats that exist on the other side of the coin. They do expect inflation to continue to moderate, as food and gas prices begin to float down.
Many economists suggest that this latest rate hold is a sign of things to come, with the BOC required to keep borrowing costs low until the Eurozone crisis is more handily contained- which at this point, is not in the immediate future. The BOC is still adopting their “wait and see” policy on fiscal policy, and have not ruled out further stimulus if the economy requires it.
About the Author
Simon Giannini is a Broker with Royal LePage Signature in Toronto, Ontario. Simon is also the Author of “Everything You Wanted To Know About Real Estate But Were Afraid To Ask”, “Buy Low, Sell High”, and “Get Rid Of Your Customers”. Simon has over 25 years experience, and is a sought after speaker and trainer for the real estate and mortgage industry. You can check out his BLOG at : www.TheRealEstateCentre.com