*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[bizaro86]

Originally Posted by powderjunkie

rates down = bad

rates up = bad

rates same = bad

I mean, the BoC lowering rates can be the right policy in the current situation (imo it probably is) without that tweet making any sense.

They certainly aren't lowering rates because the Liberals economic plan is working - they're lowering rates because anemic economic growth (worst developed country by GDP per pop growth recently) is reducing inflation, and they're trying to avoid a recession.

[blankall]

Originally Posted by bizaro86

I mean, the BoC lowering rates can be the right policy in the current situation (imo it probably is) without that tweet making any sense.

They certainly aren't lowering rates because the Liberals economic plan is working - they're lowering rates because anemic economic growth (worst developed country by GDP per pop growth recently) is reducing inflation, and they're trying to avoid a recession.

A lot of people are hurting in Canada. If the Liberals have their finance minister tweeting about how great everything is, they are going to rub a lot of people the wrong way. They need stop her from tweeting.

[ken0042]

I also seem to recall when rates were going up the Liberals were saying the BoC is an independent body so they cannot control the rates.

Rates going back down- sure we will take credit for that!

[powderjunkie]

Originally Posted by bizaro86

I mean, the BoC lowering rates can be the right policy in the current situation (imo it probably is) without that tweet making any sense.

They certainly aren't lowering rates because the Liberals economic plan is working - they're lowering rates because anemic economic growth (worst developed country by GDP per pop growth recently) is reducing inflation, and they're trying to avoid a recession.

For sure. It just seems some people love to bitch about whatever the BoC does and play shocked Pikachu face when politicians politic.

[bizaro86]

Originally Posted by powderjunkie

For sure. It just seems some people love to bitch about whatever the BoC does and play shocked Pikachu face when politicians politic.

I guess I just think "saying things that make sense" is a good standard for politicians across the spectrum.

I get that in 2024 I can't expect that from any politicians or political party, but I can dream.

[blankall]

Originally Posted by bizaro86

I guess I just think "saying things that make sense" is a good standard for politicians across the spectrum.

I get that in 2024 I can't expect that from any politicians or political party, but I can dream.

We've got the finance minister stating nutty things like g this. Meanwhile the opposition is holding court with Jordan Peterson. We're in trouble.

[The Fonz]

August YOY CPI came in at 2.0%, after a 2.5% July, a 2.7% June, and a 2.9% May.

If this trend continues for another couple months, BOC is gonna get poopy pants and we'll see greater than 25bp cuts in early 2025, I'd guess.

[blankall]

Originally Posted by The Fonz

August YOY CPI came in at 2.0%, after a 2.5% July, a 2.7% June, and a 2.9% May.

If this trend continues for another couple months, BOC is gonna get poopy pants and we'll see greater than 25bp cuts in early 2025, I'd guess.

Yeah, definitely looked like they overshot the interest rate hike. Inflation was clearly due to a lot of external factors, mostly supply chains and oil supply disruptions. The central banks were dealing with inflation as though it was entirely due to out of control spending.

https://www.cbc.ca/news/business/inf...price%20growth.

"We continue to forecast a further 200 [basis points] of interest rate cuts between now and the middle of next year."

Grantham noted that if mortgage interest costs were excluded from overall inflation, the rate would have come in at 1.2 per cent year over year.

That's a 2% fall in the next 9 months, CIBC is predicting.

[opendoor]

Originally Posted by The Fonz

August YOY CPI came in at 2.0%, after a 2.5% July, a 2.7% June, and a 2.9% May.

If this trend continues for another couple months, BOC is gonna get poopy pants and we'll see greater than 25bp cuts in early 2025, I'd guess.

I actually wouldn't be surprised if we see a 50 bps cut this year. Mortgage interest inflation (which is dropping precipitously with rate cuts) is just about the only thing keeping it above the 1% bottom end of the target range.

That said, the downward trend likely won't continue, at least in the immediate future. August 2023 had extremely high inflation relative to its normal level for that month, so once that dropped out of the trailing 12 month figure, the annual number dropped a lot. Whereas the last 4 months of 2023 were pretty normal, so for the annual number to keep dropping, we'd have to have inflation that's well below normal from September to December.

The annualized rolling averages (seasonally adjusted) paint a picture that shows it being pretty steady for the last year, so I wouldn't be surprised to see inflation level off:

3 months: 2.01%
6 months: 2.40%
9 months: 2.02%
12 months: 1.95%

[Jason14h]

Just wait till the true real estate numbers come out of Ontario and BC and not the “everything is semi ok” spin that is still being reported .

[Azure]

Not sure they overshot the rate hikes. I would have kept them higher a little longer to deal with housing stupidity, but with the economy not being on a tear they are in a good position right now to lower.

[opendoor]

Originally Posted by Azure

Not sure they overshot the rate hikes. I would have kept them higher a little longer to deal with housing stupidity, but with the economy not being on a tear they are in a good position right now to lower.

Real house prices are already back to 2017 levels and will probably fall further regardless of what interest rates do. Risking deflation and restricting economic activity on the hope of lowering house prices would be a terrible idea (setting aside the fact that housing price are not part of the Bank of Canada's mandate).

[GGG]

Originally Posted by Azure

Not sure they overshot the rate hikes. I would have kept them higher a little longer to deal with housing stupidity, but with the economy not being on a tear they are in a good position right now to lower.

The government is actively encouraging housing stupidity by bringing back 30 yr mortgages. The bank should do what the bank does and target inflation.

[Winsor_Pilates]

Originally Posted by GGG

The government is actively encouraging housing stupidity by bringing back 30 yr mortgages. The bank should do what the bank does and target inflation.

Also increased the insured mortgage cap from $1,000,000 to $1,500,000 yesterday.
A $1,500,000 purchase with an insured mortgage and 30 year amortization; yikes.

[Monahammer]

They are making stupid changes that just accelerate the problem and ultimately send housing prices up. If they wanted to stabilize payments and reduce chance of default, they would fix mortgage rates for the entirety of the loan instead of max out at 5 year terms.

[calgarygeologist]

Originally Posted by Monahammer

They are making stupid changes that just accelerate the problem and ultimately send housing prices up. If they wanted to stabilize payments and reduce chance of default, they would fix mortgage rates for the entirety of the loan instead of max out at 5 year terms.

There is no max of 5 years. 7 and 10 year rates are available with pretty much all lenders but I don't think anyone signs up for those options.

[Azure]

Is that because people are just naive? Lots of opportunity within a 10 year period to sign a loan at 2% interest rates. Why not go for the max length? Never understood the variable rate thinking.

[Fuzz]

Originally Posted by Azure

Is that because people are just naive? Lots of opportunity within a 10 year period to sign a loan at 2% interest rates. Why not go for the max length? Never understood the variable rate thinking.

Because individuals don't have much hope in predicting long term rates. If I had gone on a 10 year on my first mortgage I'd have paid around 6%, vs the ~4.55% I got for 4 years. But then I'd have missed the declining rates that had me down to ~2.9%. So a lot of money left on the table.

[rohara66]

All I know is if I ever see any fixed rated in the 2's again I will sign for as long of a term as possible.

[Muta]

My renewal is up in January - UNSURE WHAT TO DO haha. Thinking about waiting it out until last minute, and then extending my current variable by three years again. Although if it does drop below 2% somehow, would be tempted to lock that in...