*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[Yoho]

https://twitter.com/user/status/1661129646144978945

[Fuzz]

Mortgage guy complains about having less work, blames government. News at 11.

[Yoho]

Originally Posted by Fuzz

Mortgage guy complains about having less work, blames government. News at 11.

Nope that’s not what he means he’s giving warning.

[bizaro86]

Originally Posted by Slava

It doesn’t appear to have started, at least by official measures. The GDP hasn’t had a negative quarter (thought it was flat in Q4 2022).

Now do it with real GDP.

[Slava]

Originally Posted by bizaro86

Now do it with real GDP.

Haha, well we can find all kinds of measures in finance to tell us what we want to hear! I’m not saying there’s no recession coming. But what are we at now…17 months of “it’s imminent”? The consumer seems strong, earnings in this past quarter were good and while things are slowing overall it might still be close. Could be the “dish pan” recession where we do technically go negative, wits shallow?

Predicting these things with any accuracy is a lot harder than people think.

[PeteMoss]

Originally Posted by Slava

Haha, well we can find all kinds of measures in finance to tell us what we want to hear! I’m not saying there’s no recession coming. But what are we at now…17 months of “it’s imminent”? The consumer seems strong, earnings in this past quarter were good and while things are slowing overall it might still be close. Could be the “dish pan” recession where we do technically go negative, wits shallow?

Predicting these things with any accuracy is a lot harder than people think.

There's been quite a few polls in the US where the amount of people who are doing well personally is at the same level its always been at, but they think the economy is in the tank.

So people think we are in a recession even if we aren't (yet?)

[Slava]

Originally Posted by PeteMoss

There's been quite a few polls in the US where the amount of people who are doing well personally is at the same level its always been at, but they think the economy is in the tank.

So people think we are in a recession even if we aren't (yet?)

Yeah, it does get driven by psychology. They keep seeing things in the media that says things are bleak and we're going to have a recession, so people start to think that way. Not to turn this into politics, but when "your guys" are in power you also feel better about the economy than if it's the "other guys". It doesn't actually mean that the economy is better/worse and it's just psychology.

[opendoor]

Originally Posted by bizaro86

Now do it with real GDP.

That is Real GDP. Virtually all GDP growth figures represent chained dollars.

[bizaro86]

Originally Posted by opendoor

That is Real GDP. Virtually all GDP growth figures represent chained dollars.

Interesting thanks! Inflation has been so low for basically my entire life that I never really considered that relevant before!

[opendoor]

Population growth (particularly through adults immigrating) is one factor that needs to be taken into account though. If you had 1.5% Real GDP growth for a year but your population increased by 2%, is that still actual economic growth? No, not really. Which is why the "2 consecutive quarters of negative GDP growth = a recession" rule of thumb isn't always correct. It's totally possible to have a recession without that, and as we saw in the US, it's also possible to have that without it being a recession.

Per capita GDP can mostly get around that, but most figures people quote are in USD which introduces currency fluctuations as the primary factor. So that's why people say that "Canada's per capita GDP has been mostly flat for almost 10 years". Well no, it hasn't. It has continued to grow in CAD, but the CAD has lost value against the USD in that period.

Similarly, per capita GDP (in USD) in Canada went up by more than 100% from 2000 to 2010, but that's not because we had some insanely hot economy with massive growth (there were 2 recessions in there); it's because the CAD gained over 70% against the USD in that period. Actual GDP growth in that period was only about 1.8% a year.

[greyshep]

Looks like another interest rate hike could be in the cards soon

https://www.cbc.ca/news/business/ban...ncer-1.6865952

[Slava]

BoC hikes 25bps. I’m a little surprised, as I thought they’d hold but warn that they might rise more. I suppose they don’t want to hold off for too long though.

[Paulie Walnuts]

Unneeded hike.

Lots of people will be unable to afford mortgage payments and other debts.

Everything is still expensive and over priced.

[nik-]

lets have a moment of silence for all the extra taxes grocery chains are paying on their record profits

[chedder]

Originally Posted by Paulie Walnuts

Unneeded hike.

Lots of people will be unable to afford mortgage payments and other debts.

Everything is still expensive and over priced.

Inflation increased to 4.4% in April and first quarter gdp was 3.1%. The central banks concern isn't whether renewing mortgagors can afford the new payments. That's a small part of the whole picture. Purchases of interest-rate sensitive goods are increasing. House prices are increasing. The exact opposite of what you want to see if you're trying to decrease inflation.

[Bonded]

Originally Posted by Paulie Walnuts

Unneeded hike.

Lots of people will be unable to afford mortgage payments and other debts.

Everything is still expensive and over priced.

Is this really the rate hike that does it? Everything is so damn resilient.



https://www.theglobeandmail.com/busi...rebound-april/

[Slava]

Originally Posted by chedder

Inflation increased to 4.4% in April and first quarter gdp was 3.1%. The central banks concern isn't whether renewing mortgagors can afford the new payments. That's a small part of the whole picture. Purchases of interest-rate sensitive goods are increasing. House prices are increasing. The exact opposite of what you want to see if you're trying to decrease inflation.

Yeah, but the counterpoint is that the rate hikes drive up housing in a couple ways. The first is the obvious that mortgage rates increase for people with variable mortgages, and people who are renewing from the mortgage they had a five year term on from 2018. Then you have rental increases because the underlying costs for the owner have increased (assuming they have an outstanding mortgage).

And lastly, it decreases the pool of would-be sellers, because that mortgage they have for say 2% would now be 5% on the new place. Decreased sellers means less inventory and we've been experiencing that for the past few months.

[Fuzz]

Originally Posted by Slava

Yeah, but the counterpoint is that the rate hikes drive up housing in a couple ways. The first is the obvious that mortgage rates increase for people with variable mortgages, and people who are renewing from the mortgage they had a five year term on from 2018. Then you have rental increases because the underlying costs for the owner have increased (assuming they have an outstanding mortgage).

And lastly, it decreases the pool of would-be sellers, because that mortgage they have for say 2% would now be 5% on the new place. Decreased sellers means less inventory and we've been experiencing that for the past few months.

But inflation also increases housing costs. Not an easy balance to get right.

[Azure]

Well one thing is now certain, policy makers have screwed us to the point where standard economic policies that may have worked in the past are now have the opposite effect.

You can't expect housing costs to cool off when you don't control immigration.

To the BoC, everything looks like a nail which they think they can hit with the 'increase the rate' hammer.

When such a big part of our GDP is based on housing, there are a lot of interests working very hard to make sure prices keep going up.

[CorsiHockeyLeague]

Welp, that 2.99% ten year fixed rate I locked in last spring is sure looking like a solid decision.