The Canadian economy is doing so well that we're still cutting bank rates closer and closer to zero. Bank of Canada says we are carrying too much debt. And to help you stop borrowing, we are making it easier for you to go into debt.
The CAD instantly lost 3% when the news came out....and Draghi about to unleash his version of QE to save the EU.
Discuss.
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The Bank of Canada unexpectedly cut its main interest rate, saying the oil-price shock will drag down inflation and weigh on everything from exports to business and consumer spending.
The bank cut its rate on overnight loans between commercial banks by a quarter percentage point to 0.75%, a decision none of the 22 economists in a Bloomberg News survey predicted. The rate, which influences everything from car loans to mortgages, had been at 1% since September 2010. The last cut was in April 2009.
Policymakers are grappling with the impact of crude oil, Canada’s top export, falling to less than US$50 a barrel from $107 this summer.
“The oil price shock increases both downside risks to the inflation profile and financial stability risks,” the central bank said in the statement. Today’s rate cut is “intended to provide insurance against these risks” and support the adjustments needed to return the economy to full output, they said.
The central bank also reduced its growth forecast for the first half of this year to a 1.5% annualized pace, from an October estimate of 2.4%. Inflation will slow to 0.3% in the second quarter, outside the central bank’s target range of 1% to 3%, the bank projected.
The latest forecasts assume benchmark crude prices at $60 a barrel, down from an October assumption of $85 barrel. Policy makers said there are near-term risks that prices will remain lower than $60, and if they persist around $50 then first-half growth could fall to 1.25%.
Oil and gas investment will probably drop by about 30% this year and be little changed in 2016, the bank said, adding growth in Canadian energy exports will slow to 1% from 6% in 2014. Crude oil prices mean “many projects” in Canada are now unprofitable, the central bank said.
http://business.financialpost.com/2015/0...n-economy/
The CAD instantly lost 3% when the news came out....and Draghi about to unleash his version of QE to save the EU.
Discuss.