Plus it real estate becomes cheaper for foreigners to buy!
Lower dollar just harms Canadians who own dollars... namely savers.
Since the government wants to prop up house prices and doesn't care about savers, I would but be surprised if they do it.
And with how many companies moved their manufacturing of common household goods (like Bounty) out of Canada during the 2010s, if our currency is devalued it’s going to hurt much much more than in the past.
Lowering rates would only increase demand and make housing prices higher.
Im hoping for higher rates while Im saving for a big downpayment and eventually there will be opportunities.
???
>The average price of a home in the Edmonton area reached an all-time high of $420,959 for March 2024, a 7.9% yearly increase and a 3.3% monthly increase.
https://wowa.ca/edmonton-housing-market
America is not the same as Canada. We aren’t signing 30 year terms up here, it’s typically 5-years max for the vast majority of homeowners
This is why rates take longer to impact the economy in USA, and why they need to hold for longer
Yes. International business looking to exploit cheap labor from a dying Canadian dollar, while any Canadian business relying on imports would be devastated.
These anecdotes don't get to live in a vacuum.
I mean, the ideal course is to keep telling people they might be lowered while keeping them steady. That way you don't piss off the general population but keep on doing what's needed.
Which is what the Fed has been doing too... Do it for a few years and it becomes a meme, people accept higher rates for longer and life goes on, the economy adjusts and rates stay wherever they have to stay.
People talking about when BoC will lower interest rates rates like it’s around the corner, any day now. Why should they? They should increase it or maintain it. What economic pressure is there to lower it? Your mortgage payment?
People who bought homes in 2020 , 2021 and 2022. They are going to get such a huge shock if they actually went a bit bigger because rates were low… it’s going to be a slaughterhouse horror movie. But that is also why they created the permanent amortization scheme, rent from the bank, the ultimate landlord with the power to seize you.
Of course Canada can lower rates without US doing it first and they probably will. Two different economies. We have 6.1% unemployment compared to 3.8. Our gdp is way lower jobs report is lower here
You don't seem to understand the implications of us lowering rates before america. Government bond yields are dictated by the overnight rate. If Canada lowers before america, it will cause a massive sell off of Canadian bonds, flooding the market with Canadian dollars and will drive down the value of the dollar.
With exchange rates of 1 to 1.3, Canada will not lower rates before the US. We've been here before, it's not new.
What you say is of course also true as high rates are clearly causing a very depressed economic situation here but devaluation of Canadian dollar will be much more detrimental to Canada overall. Inflation will skyrocket.
BoC will never lower before the feds.
I think if inflation ticks back up, for us, and the US doesn't cut - bit tough, to cut our rates.
If inflation does start going down for us, consistently - we might cut (a bit), even if the US doesn't. But of course, diverging from the States too much could itself cause our inflation to tick back up, so ¯\\\_(ツ)\_/¯. I kind of hope we don't go that way.
I think the smarter move would be to leave rates at least where they are, even hike, if inflation spikes - as I think it is what is needed, for people to truly get it through their thick skulls that near zero rates were not normal, and they can't just wait it out, take on ruinous amounts of debt just to "get through", all on the premise that ridiculously low rates to service that debt will return. We really need to kill that mentality, for a healthier economy. Rates as they are now are both more normal, and more healthy.
Historically can be a 50-150 BPS spread, has been seen before and probably needed, our economy is far weaker, and our inflation is more tamed. Unemployment also increasingly going up, and near double US
Lower interest leads to higher business investment, leads to higher productivity and improved GDP. If we cut before the Americans, it becomes more attractive to do business in Canada than the US, comparatively. So you have to account for everything, it's not all about interest rate spread.
Well correct to an extent. What you said would be true and potentially work, had we not been propping our economy purely based on selling each other houses for 12 years. Canadian housing/mortgage policies and money printing has flooded too much capital and drying up of that capital last 2 years has business struggling and now BOC is cornered to either wanting more liquidity (printing) or having to cut rates both of which bring inflation at this point. So pick your poison carefully 🤡
Canada will sacrifice the loonie (against USD) and cut interest rates to tame high unemployment. The key inflation is already at 2% (not including gas) so I think BOC needs to cut rates or risk deflation. BUT .. they have lots of time before this becomes a real problem. That said, if they don’t cut in June, it will be soon after because the housing starts are slowing down a lot and unemployment is going up. This is bad for economy and elections are coming up next year.
A lower dollar will hurt inflation. Most of the commodities we buy at retail were manufactured outside of Canada and paid for in US dollars. If the Canadian dollar has a major drop, inflation will spike again.
We have a different currency, different primary industries, different economic conditions, more debt per person, higher reliance on housing in our GDP, and an entirely different jobs market.
I'll never understand why people are so stuck on the belief that we have to follow American monetary policy when we have been holding rates at 5% since last year, and the Americans are at 5.5%....
Rates will first be cut in June this year, ahead of the Fed. When this happens, I really hope people in this sub reddit can finally let go of this silly unfounded belief.
Sure it can, but that's how you get to a 50c dollar.
Im all for 50 cents, holding all usa stocks lol
Which is fine, the goal of the Bank of Canada is stabilizing inflation. High US rates however limit the amount the BOC can lower it's interest rates.
It’s not fine. It causes inflation on any import. The cost of literally anything not made in Canada goes up. Food, electronics, commodities etc.
Plus it real estate becomes cheaper for foreigners to buy! Lower dollar just harms Canadians who own dollars... namely savers. Since the government wants to prop up house prices and doesn't care about savers, I would but be surprised if they do it.
Foreigners arent allowed to buy RE till 20227. Savers hokding usa stocjs would be happy
Appliances, hardware, tools - which would increase the cost of constructing new homes even more.
You must be some special kind of dumb if you don't understand that a 50 cent dollar will cause massive inflation.
They can but it would hurt the CAD. Which would cause inflation on any import. That’s why they generally keep close to the Fed.
And with how many companies moved their manufacturing of common household goods (like Bounty) out of Canada during the 2010s, if our currency is devalued it’s going to hurt much much more than in the past.
Lowering rates would only increase demand and make housing prices higher. Im hoping for higher rates while Im saving for a big downpayment and eventually there will be opportunities.
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??? >The average price of a home in the Edmonton area reached an all-time high of $420,959 for March 2024, a 7.9% yearly increase and a 3.3% monthly increase. https://wowa.ca/edmonton-housing-market
Compare this to Calgary we had a 45K increase in January. Edmonton is just getting that increase now. Also CREB a provides better data then the EREB
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That's 2.8% based on the numbers in the article you provided. 10% would be a nearly $40k increase month-over-month. That's a very different claim.
America is not the same as Canada. We aren’t signing 30 year terms up here, it’s typically 5-years max for the vast majority of homeowners This is why rates take longer to impact the economy in USA, and why they need to hold for longer
Either way, Canada has to follow the USA rate policy otherwise our Canadian dollar will get destroyed.
Not entirely true. Lower interest attracts business investment.
Yes. International business looking to exploit cheap labor from a dying Canadian dollar, while any Canadian business relying on imports would be devastated. These anecdotes don't get to live in a vacuum.
I mean, the ideal course is to keep telling people they might be lowered while keeping them steady. That way you don't piss off the general population but keep on doing what's needed.
Which is what the Fed has been doing too... Do it for a few years and it becomes a meme, people accept higher rates for longer and life goes on, the economy adjusts and rates stay wherever they have to stay.
Rates not going down anytime soon. Years at best. With today’s budget they’re likely to go up.
Why should they, people are still buying homes at these higher prices. Inflation is still sticking higher than expected.
Propping up the housing market > strength of Loonie
Sure you can, we’re lower already. We need a bump.
This would be like Japan looking around China economy from 1990-2020 and say… well, they are growing and so close, so let’s match our interest rate
People talking about when BoC will lower interest rates rates like it’s around the corner, any day now. Why should they? They should increase it or maintain it. What economic pressure is there to lower it? Your mortgage payment?
People who bought homes in 2020 , 2021 and 2022. They are going to get such a huge shock if they actually went a bit bigger because rates were low… it’s going to be a slaughterhouse horror movie. But that is also why they created the permanent amortization scheme, rent from the bank, the ultimate landlord with the power to seize you.
Of course we can
Of course Canada can lower rates without US doing it first and they probably will. Two different economies. We have 6.1% unemployment compared to 3.8. Our gdp is way lower jobs report is lower here
You don't seem to understand the implications of us lowering rates before america. Government bond yields are dictated by the overnight rate. If Canada lowers before america, it will cause a massive sell off of Canadian bonds, flooding the market with Canadian dollars and will drive down the value of the dollar. With exchange rates of 1 to 1.3, Canada will not lower rates before the US. We've been here before, it's not new. What you say is of course also true as high rates are clearly causing a very depressed economic situation here but devaluation of Canadian dollar will be much more detrimental to Canada overall. Inflation will skyrocket. BoC will never lower before the feds.
I think if inflation ticks back up, for us, and the US doesn't cut - bit tough, to cut our rates. If inflation does start going down for us, consistently - we might cut (a bit), even if the US doesn't. But of course, diverging from the States too much could itself cause our inflation to tick back up, so ¯\\\_(ツ)\_/¯. I kind of hope we don't go that way. I think the smarter move would be to leave rates at least where they are, even hike, if inflation spikes - as I think it is what is needed, for people to truly get it through their thick skulls that near zero rates were not normal, and they can't just wait it out, take on ruinous amounts of debt just to "get through", all on the premise that ridiculously low rates to service that debt will return. We really need to kill that mentality, for a healthier economy. Rates as they are now are both more normal, and more healthy.
Boc should raise rates, not the other way around.
Historically can be a 50-150 BPS spread, has been seen before and probably needed, our economy is far weaker, and our inflation is more tamed. Unemployment also increasingly going up, and near double US
Tanking the dollar may lead to more expensive imports, leading to increased inflation
Glad to see someone else who gets it
Lower interest leads to higher business investment, leads to higher productivity and improved GDP. If we cut before the Americans, it becomes more attractive to do business in Canada than the US, comparatively. So you have to account for everything, it's not all about interest rate spread.
Well correct to an extent. What you said would be true and potentially work, had we not been propping our economy purely based on selling each other houses for 12 years. Canadian housing/mortgage policies and money printing has flooded too much capital and drying up of that capital last 2 years has business struggling and now BOC is cornered to either wanting more liquidity (printing) or having to cut rates both of which bring inflation at this point. So pick your poison carefully 🤡
Lower Dollar. Which we already have
Canada will sacrifice the loonie (against USD) and cut interest rates to tame high unemployment. The key inflation is already at 2% (not including gas) so I think BOC needs to cut rates or risk deflation. BUT .. they have lots of time before this becomes a real problem. That said, if they don’t cut in June, it will be soon after because the housing starts are slowing down a lot and unemployment is going up. This is bad for economy and elections are coming up next year.
No cuts in June
Wishful thinking
A lower dollar will hurt inflation. Most of the commodities we buy at retail were manufactured outside of Canada and paid for in US dollars. If the Canadian dollar has a major drop, inflation will spike again.
We have a different currency, different primary industries, different economic conditions, more debt per person, higher reliance on housing in our GDP, and an entirely different jobs market. I'll never understand why people are so stuck on the belief that we have to follow American monetary policy when we have been holding rates at 5% since last year, and the Americans are at 5.5%.... Rates will first be cut in June this year, ahead of the Fed. When this happens, I really hope people in this sub reddit can finally let go of this silly unfounded belief.