Bank of Canada CUTS RATE: Tiff Macklem Faces The Stark Reality Of A Canadian Economy Headed For The Crapper
The BoC Governor made the expected move & cut the bank's key Lending Rate by 25 bps
The "Why" is easy: the Canadian economy particularly in Central Canada is slowing
2/
The BoC Governor made the expected move & cut the bank's key Lending Rate by 25 bps
The "Why" is easy: the Canadian economy particularly in Central Canada is slowing
2/
The point of raising BoC Rate from 0.25% to 5%: the fastest increases in Canadian history was to force inflation back to target by seriously damaging the economy to the point people are buying far less & prices deteriorate because of falling demand
Mission Accomplished!
3/
Mission Accomplished!
3/
New Home Construction has collapsed in Ontario, retail sales are down across the country, loan delinquency is WAY up
Simply stated: Canada is well on its way to going to Economic Hell in a Handbasket
A year from now we will wonder why the first cut wasn't March or April
4/
Simply stated: Canada is well on its way to going to Economic Hell in a Handbasket
A year from now we will wonder why the first cut wasn't March or April
4/
What happens next?
Likely another 25 bps cut in September
Then another short pause to get the November 5th US Election over with so the Federal Reserve can start their cutting cycle
And over the course of 12 to 24 months BoC rates fall to the Terminal Rate in this cycle
5/
Likely another 25 bps cut in September
Then another short pause to get the November 5th US Election over with so the Federal Reserve can start their cutting cycle
And over the course of 12 to 24 months BoC rates fall to the Terminal Rate in this cycle
5/
It's just guesswork
Maybe the BoC Rate ends up around 3% maybe a touch higher or maybe a bit less
Which means Variable Mortgage Rates in low 4% range & HELOC rates in the mid to high 5% range
But that could take awhile
What happens to Housing? Where do prices go?
6/
Maybe the BoC Rate ends up around 3% maybe a touch higher or maybe a bit less
Which means Variable Mortgage Rates in low 4% range & HELOC rates in the mid to high 5% range
But that could take awhile
What happens to Housing? Where do prices go?
6/
No clue
There is pent up demand for homes but the effect of a bad economy are far fewer big ticket sales
And a house is the biggest ticket purchase there is
There is pent up demand for homes but the effect of a bad economy are far fewer big ticket sales
And a house is the biggest ticket purchase there is
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