11 Feb

Rate cut talk gathers pace


Posted by: Kimberly Walker

Rate cut talk gathers pace

by Jamie Henry | 11 Feb 2015

More experts are joining the voices calling for a further cut in interest rates when the Bank of Canada announces its decision next month. The bank’s senior deputy governor Carolyn Wilkins said yesterday that “the economy still has room to grow” and that the bank’s monetary policy will “support the needed adjustments.” She said that the economy needs to adjust to the lower oil prices and that the bank doesn’t want to do anything that could stifle that. The labour market is one of the main areas of concern, especially with lay-offs in the energy sector, along with output and Ms. Wilkins believes that the gaps will close over time. She says that low and stable inflation will help boost investment and prompt the creation of more jobs. The Bank of Montreal’s senior economist Benjamin Reitzes says that we should “Look for another rate cut in March, and don’t count out further easing.” The rate decision will be announced on Mar. 4.

4 Feb

Major Cuts To Come From Bank of Canada


Posted by: Kimberly Walker

Major cuts to come from BoC?

by Justin da Rosa | 04 Feb 2015

The voices predicting a further Bank of Canada rate cut have become a chorus, with another bank stating it believes the central bank still has additional basis points to slash.

HSBC Bank PLC has predicted the BoC will lower its benchmark to 0.5 in March and again in Q2 to a mere 0.25 per cent, according to Michael Babad of the Globe and Mail.

Of course, two of Canada’s major banks have already made their own rate cut predictions for the coming months.

“The Bank of Canada assumed upcoming weakness in the economy when it cut rates last week. Although its focus is on 2015, with growth in Q4 now set to come under its 2.5 per cent forecast, the BoC has all the more reason to cut again in March,” CIBC states in its Economic Flash report published Friday. “The downdraft from oil will indeed be significant, but overall output’s response to cheaper fuel, lower rates, and a significantly weaker Canadian dollar means that our full-year growth target for 2015 is still around the economy’s potential.”

That report followed on the heels of a similar prediction made by TD Bank, who also predicts a further rate cut to come from the Bank of Canada at its next rate announcement.

“The Bank of Canada unexpectedly cut the overnight rate by 25 basis points in mid-January, on the negative impact of lower oil prices on inflation and the real economy. At that time, it also signaled that it saw most of the risks to inflation to be tilted to the downside,” TD’s economic update, published in late January states. “Given our weaker oil price, inflation, and output forecast relative to the Bank, it therefore holds that we expect some of those downside risks to be realized.

“As such, we forecast that the Bank of Canada will cut the overnight rate by an additional 25 basis points at its next fixed announcement date in March.”