It looks like the Bank of Canada (BoC) govenor, Stephen Poloz, has decided that Canada’s economy is faltering and needs further stimulus to stay afloat. With the announced 0.25% decrease in the overnight lending rate, Canada’s mortgage lenders will soon be lowering variable rates. However, the general consensus is that the big banks will likely not pass along the full cut in the key interest rate when adjusting their new prime lending rates. I’m sure that we’ll know more in the next few days.
Pundits have predicted that this rate cut will cause the $CDN to slide further down when compared to the $US, making Canadian exports more competitive. Will this be enough to stimulate the economy, or is it just a drop in the bucket? With the prospect of US interest rates likely being raised in September, they may soon be pressure on Canada to raise interest rates again. The cynic in me says that this kind of bad news will be delayed until after the upcoming federal election.
Of course, it will be interesting to see how this might affect housing sales in Victoria. As Just Jack posted a few days ago, it looks like we’ve past the peak in house sales. This chart shows the daily rate of new listings peaked in early May while the daily rate of sales peaked in early June. (Note: Data have been calculated from VREB weekly sales statistics posted by Marko.)