*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[bizaro86]

Originally Posted by Slava

As far as a source, I get my information from FactSet. It's an insane amount of detail that they provide, but of course I pay what I consider to be a significant amount for that.

It seems improbable to me that they have financial information outside of what public companies have reported to the OSC and/or SEC.

Of course, anyone can make any estimates they like, but then those are just estimates.

As an aside - have you considered using Tikr? The savings over FactSet would be dramatic...

[Slava]

Originally Posted by bizaro86

It seems improbable to me that they have financial information outside of what public companies have reported to the OSC and/or SEC.

Of course, anyone can make any estimates they like, but then those are just estimates.

As an aside - have you considered using Tikr? The savings over FactSet would be dramatic...

Well I could dig deeper and see where they get the information, but it's there. I have no reason to fabricate it, and it's just the facts.

I've looked at alternatives and will probably change. These data systems are just insanely priced overall. Factset is a little cheaper than Bloomberg, but not a ton. It's overall "okay", IMO. It's got a huge amount of information, but it's also somewhat cumbersome. The way they get you though, is that spend a lot of time building things in their ecosystem, and a switch means rebuilding that elsewhere. Yeah, there can be some portability, but it's a lot of work. So, a change to something cheaper is something I've considered, but it's just without issues either!

[Yoho]

https://twitter.com/user/status/1684272906992246795

https://twitter.com/user/status/1684262693371248663

[iggy_oi]

Originally Posted by Yoho

https://twitter.com/user/status/1684272906992246795

https://twitter.com/user/status/1684262693371248663

Polievre: “Look at what Trudeau did”

[Monahammer]

Now we get to see how much the central bank believes in the economy.

If we don't match the raise by the fed, we could see our currency devalued. If we do, it is likely to really #### up a lot of Canadian homeowners and potentially even one of the big banks (CIBC.)

[The Fonz]

Originally Posted by Monahammer

Now we get to see how much the central bank believes in the economy.

If we don't match the raise by the fed, we could see our currency devalued. If we do, it is likely to really #### up a lot of Canadian homeowners and potentially even one of the big banks (CIBC.)

Can you elaborate on this?

[pseudoreality]

If a substantial gap formed between Canadian interest rates and US interest rates, investors would sell Canadian Dollars and buy US dollars to get a better return. This would result in the Canadian dollar losing value against the US dollar, lower buying power of the Canadian dollar, and inflation.

[Firebot]

Considering the US is 50 points up on Canada right now and the US warns that more rates may need to happen, rates are likely going to continue to go up. I say 1 rate hike at the minimum by year end, although Sep may see a pause. It would take quite a catalyst for the rates to go back down near term.

This despite BoC seemingly considering a pause in July

https://financialpost.com/news/econo...hike-necessary

The fear of inflation rearing back is enough for the bank to avoid giving slack. Back in October it looked like the market was fully expecting rates to go back down, and as a result the market did not react to the rate increase as expected.

[Bill Bumface]

Originally Posted by The Fonz

Can you elaborate on this?

Their book of business is currently carrying too much risk, and the OFSI has told them to get their house in order. People with CIBC lines of credit that are deemed higher risk are getting interest rates jacked and limits cut:

https://www.mpamag.com/ca/mortgage-i...rtfolio/450033

[bluejays]

I know this sounds conspiratorial but I do wonder if the BOC doesn't mind the reset of home prices. The economy has been strong for the most part, and no political party seems to want to have their hand in lowering prices substantially, to the point where homes have bubbled (specifically in Toronto and Vancouver). If it kept going surely there would be catastrophic consequences if it popped. This is just a convenient way to reset it without tying it to a governing party directly. That's my thought but I don't know if there's any basis to it.

[calgarygeologist]

Originally Posted by bluejays

I know this sounds conspiratorial but I do wonder if the BOC doesn't mind the reset of home prices. The economy has been strong for the most part, and no political party seems to want to have their hand in lowering prices substantially, to the point where homes have bubbled (specifically in Toronto and Vancouver). If it kept going surely there would be catastrophic consequences if it popped. This is just a convenient way to reset it without tying it to a governing party directly. That's my thought but I don't know if there's any basis to it.

It's all part of the great reset.

[Weitz]

Originally Posted by bluejays

I know this sounds conspiratorial but I do wonder if the BOC doesn't mind the reset of home prices. The economy has been strong for the most part, and no political party seems to want to have their hand in lowering prices substantially, to the point where homes have bubbled (specifically in Toronto and Vancouver). If it kept going surely there would be catastrophic consequences if it popped. This is just a convenient way to reset it without tying it to a governing party directly. That's my thought but I don't know if there's any basis to it.

Rightly or wrongly people will just blame the government in charge.

[nik-]

Originally Posted by bluejays

I know this sounds conspiratorial but I do wonder if the BOC doesn't mind the reset of home prices. The economy has been strong for the most part, and no political party seems to want to have their hand in lowering prices substantially, to the point where homes have bubbled (specifically in Toronto and Vancouver). If it kept going surely there would be catastrophic consequences if it popped. This is just a convenient way to reset it without tying it to a governing party directly. That's my thought but I don't know if there's any basis to it.

Are home prices resetting?

[PeteMoss]

Originally Posted by bluejays

I know this sounds conspiratorial but I do wonder if the BOC doesn't mind the reset of home prices. The economy has been strong for the most part, and no political party seems to want to have their hand in lowering prices substantially, to the point where homes have bubbled (specifically in Toronto and Vancouver). If it kept going surely there would be catastrophic consequences if it popped. This is just a convenient way to reset it without tying it to a governing party directly. That's my thought but I don't know if there's any basis to it.

If the economy starts to wane - they will stop increasing/start decreasing rates - and then you're back on the same road.

The Economics 101 of stopping inflation is:
1) Economy is running too hot so demand is outpacing supply
2) (a) Interest rate increase increasing borrowing costs so people will spend less which slows down the economy
3) Inflation will go down

Right now - they've increased the rates 2(a) and (3) is happening.

But the economy is still running hot if you look at unemployment rates for example. Here's the US rates since 1950 or so - https://fred.stlouisfed.org/series/UNRATE and you can see its at a rate as low as its ever been historically (you have to go back to the 50's/60s to see a rate this low).

So the thing that is supposed to cause inflation to decrease - economic slowdown - is not happening. But inflation is declining. So the worry is - if you stop increasing or even indicate you are going to stop increasing rates - inflation will come roaring back, because the only thing holding people back from spending more now is the threat of the borrowing cost continuing to increase in the future.

[DoubleF]

Originally Posted by bluejays

I know this sounds conspiratorial but I do wonder if the BOC doesn't mind the reset of home prices. The economy has been strong for the most part, and no political party seems to want to have their hand in lowering prices substantially, to the point where homes have bubbled (specifically in Toronto and Vancouver). If it kept going surely there would be catastrophic consequences if it popped. This is just a convenient way to reset it without tying it to a governing party directly. That's my thought but I don't know if there's any basis to it.

A housing bubble popping is not a good thing for economies. You want a controlled deflation of the bubble, not popping it at its peak. They'd love a housing price reset I bet, but not on the back of a bunch of defaults on properties.

But housing prices will not go back to normal even if they go back to 2021 prices. Too many people have already poured in a ton of money and many more homes gentrified and were improved than amortized over that few year span. Even if prices come down, people will still pay somewhat of a premium to get stability because their mindset is still of the current unstable scenario.

UHT, first time home buyer type plans and provincial transfer taxes were supposed to help, but I honestly think it hurt individuals who were landlords here more than foreign investment... at least IMO it will continue to do so for at least the next few years. Longer term, I dunno. Maybe Canadians will have less debt but more assets/home ownership vs other countries worldwide or something.

[blankall]

I don't see a housing bubble pop, as long as there is a massive shortage of homes and so many new Canadians every year. Rents in Toronto and Vancouver continue to rise dramatically:

https://vancouver.citynews.ca/2023/0...rocket-report/
https://www.cp24.com/news/toronto-re...404%2F7.578962

Prices have certainly stalled out. Prices are 4.7% lower than the peak, and you have to factor in inflation, which has resulted in sharp decrease in real value:

https://wowa.ca/vancouver-housing-market

There are just too many people in Vancouver with money for the whole thing to collapse. There's an ever dwindling supply of detached houses, and if they dropped $400k in price, investors would just snap them up.

[opendoor]

Originally Posted by PeteMoss

If the economy starts to wane - they will stop increasing/start decreasing rates - and then you're back on the same road.

The Economics 101 of stopping inflation is:
1) Economy is running too hot so demand is outpacing supply
2) (a) Interest rate increase increasing borrowing costs so people will spend less which slows down the economy
3) Inflation will go down

Right now - they've increased the rates 2(a) and (3) is happening.

But the economy is still running hot if you look at unemployment rates for example. Here's the US rates since 1950 or so - https://fred.stlouisfed.org/series/UNRATE and you can see its at a rate as low as its ever been historically (you have to go back to the 50's/60s to see a rate this low).

So the thing that is supposed to cause inflation to decrease - economic slowdown - is not happening. But inflation is declining. So the worry is - if you stop increasing or even indicate you are going to stop increasing rates - inflation will come roaring back, because the only thing holding people back from spending more now is the threat of the borrowing cost continuing to increase in the future.

I don't know, none of the other similarly low points in unemployment had particularly high inflation. In fact, the highest prolonged inflation period ('70s to early '80s) coincided with high unemployment. And over the last 50 years or so, Real GDP growth has been inversely correlated with inflation (i.e. when growth drops, inflation rises, and vice versa). So I don't think there's a lot of evidence that a hot economy is going to drive inflation (unless productivity randomly plummets or wage growth is way out of whack, neither of which is happening).

Money supply growth correlates far more heavily with ongoing inflation, and the US has actually contracted its money supply over the last year or so, which is virtually unprecedented. If that continues, I don't really see where these inflationary pressures are going to come from.

All that said, a hot economy does mean that higher rates are sustainable, so the end result is more or less the same. They only need to lower rates to spur economic growth. So if growth is happening anyway, rates will stay higher for longer.

[blankall]

Originally Posted by opendoor

I don't know, none of the other similarly low points in unemployment had particularly high inflation. In fact, the highest prolonged inflation period ('70s to early '80s) coincided with high unemployment. And over the last 50 years or so, Real GDP growth has been inversely correlated with inflation (i.e. when growth drops, inflation rises, and vice versa). So I don't think there's a lot of evidence that a hot economy is going to drive inflation (unless productivity randomly plummets or wage growth is way out of whack, neither of which is happening).

Money supply growth correlates far more heavily with ongoing inflation, and the US has actually contracted its money supply over the last year or so, which is virtually unprecedented. If that continues, I don't really see where these inflationary pressures are going to come from.

All that said, a hot economy does mean that higher rates are sustainable, so the end result is more or less the same. They only need to lower rates to spur economic growth. So if growth is happening anyway, rates will stay higher for longer.

There are lots of non money supply related inflation pressures. Oil prices. War in Ukraine. Housing shortage. Supply chain issues. A lot of industries are still suffering from material shortages.

The labor shortage in China is going to change the way the world gets materials. With China's population shrinking and the cost of labor going up there, that will mean less goods coming out of China and prices going up across the board.

https://www.businessinsider.com/chin...economy-2023-2

The "end of globalization" is going to drive up costs. We're all going to have to get used to having less stuff for a while.

[Azure]

With grain shortages coming, will be another boon for the Canadian economy and at the same time another excuse for Loblaws to drive up the prices again.

[Slava]

Originally Posted by Azure

With grain shortages coming, will be another boon for the Canadian economy and at the same time another excuse for Loblaws to drive up the prices again.

I'm curious...what would you have them do? If the price of oil goes up, do you expect that Petro-Canada is just eating that increase and keeping the price where it is?