Post: #1

The Canadian economy is doing so well that we're still cutting bank rates closer and closer to zero. Bank of Canada says we are carrying too much debt. And to help you stop borrowing, we are making it easier for you to go into debt.

Quote:The Bank of Canada unexpectedly cut its main interest rate, saying the oil-price shock will drag down inflation and weigh on everything from exports to business and consumer spending.

The bank cut its rate on overnight loans between commercial banks by a quarter percentage point to 0.75%, a decision none of the 22 economists in a Bloomberg News survey predicted. The rate, which influences everything from car loans to mortgages, had been at 1% since September 2010. The last cut was in April 2009.

Policymakers are grappling with the impact of crude oil, Canada’s top export, falling to less than US$50 a barrel from $107 this summer.
“The oil price shock increases both downside risks to the inflation profile and financial stability risks,” the central bank said in the statement. Today’s rate cut is “intended to provide insurance against these risks” and support the adjustments needed to return the economy to full output, they said.

The central bank also reduced its growth forecast for the first half of this year to a 1.5% annualized pace, from an October estimate of 2.4%. Inflation will slow to 0.3% in the second quarter, outside the central bank’s target range of 1% to 3%, the bank projected.

The latest forecasts assume benchmark crude prices at $60 a barrel, down from an October assumption of $85 barrel. Policy makers said there are near-term risks that prices will remain lower than $60, and if they persist around $50 then first-half growth could fall to 1.25%.

Oil and gas investment will probably drop by about 30% this year and be little changed in 2016, the bank said, adding growth in Canadian energy exports will slow to 1% from 6% in 2014. Crude oil prices mean “many projects” in Canada are now unprofitable, the central bank said.

http://business.financialpost.com/2015/0...n-economy/

The CAD instantly lost 3% when the news came out....and Draghi about to unleash his version of QE to save the EU.

Discuss.

Post: #2

With Alberta's public finances tanking, the federal government is left with less money to work with.

Quebec and Ontario continue to drag their heels miserably. The activist policy of Kathryn Wynne hasn't gotten the Ontario economy moving. Neither province, Quebec nor Ontario are going to pick up the slack from the sudden dissappearance of Alberta oil money. The government taxes us far less today than it did in 2004, but that means a generally less federal money dispensed to provinces for services.

And thus the economy is slowly going into a funk just as the USA picks up.

Post: #3

does this mean the canadian dollar will tank below 80?

Post: #4

And in the meantime, the Canadian dollar has been on a free fall versus most currencies! How can the Canadian economy be doing so well with oil tanking and the loonie being on a free fall? I'm no economist but that doesn't add up!

Post: #5

You do realize with bank charges you end up getting negative interest rates on your money.

Time to buy silver/gold to hedge against this.

Post: #6

(01-21-2015 01:12 PM)oilbreh Wrote:  does this mean the canadian dollar will tank below 80?

Probably. It is already only trading a hair above $80.

With oil prices continuing to stay low and Canadian household debt soaring, the Canuck dollar is going to shit.

Post: #7

Low oil prices benefit non oil producing provinces.

Post: #8

Great news for those of us headed to Canada in the upcoming weeks. I know I'll likely be a beneficiary of this.

Post: #9

I feel stupid for closing up my US fund account. I had it as a hedge for a while and was up but then closed it.

Canadian economy is on egg shells. Its all oil, housing (financing <--> construction), and Wal-mart. You see anecdotes all around. All my time in Toronto I have never seen shitty cars become more common then now. When I first came here the cranes were all over downtown and nobody drove a old car. Either a Merc, Benzo, or at least a shiny new-ish Toyota or Honda. I see junkers like 2000 Grand Marquis and shit out now. The housing market here is a joke. We have Tokyo sized micro units at 500 sq feet being sold for high amounts upwards of $800 a square foot. Toronto folks think this is cool since we are paying London and NYC prices, but we are not London or NYC that offer wold class amenities.


Well at least Ontario isn't B.C. ...

You only see real growth in Saskatchewan and Alberta. Alberta has burned through its cash piles it had up from all those years. I am not sure what you get from all those boom years in Alberta. Only 2 million people and billions upon billions of oil revenues and what do you get?

If people in Canada knew how good we could have it. Canada in the 60s was just below wealth per capita than the Swiss. We were behind America in sheer wealth numbers but we had more wealth circulating among greater reaches of the population. The 70s and 80s kick started policies that robbed Canadian dry. International fanciers and American came here and looted all our wealth. No we can barley run surplus fro ma Government that relies so much on oil revenues when we a national population smaller then two Chinese cities put together.

Post: #10

^^
thats the price of being an american colony

Post: #11

‘The dollar has tanked’ in wake of shock interest-rate cut:

http://www.thestar.com/business/2015/01/...e-cut.html

^In the above story, there is a vid showing the Bank of Canada Governor speaking. He sounds dumbfounded when a reporter asks him if the economy has stalled. His explanation of why it has not is pathetic, to say the least. With fools like this at the helm of the Canadian economy, expect things to get worse. Much worse.

Post: #12

You would think the idea would be to raise it to lure in capital into our markets.

... oh wait Canadians are over-extended on debt and even a .25% hike would drown people.

But the money mind in me would think that would be the better move. Industry has fat piles of cash. Corporations in Canada are swimming in money and Industry has had cheap debt to purchase new innovation and equipment, bleak energy prices help them too as fuel is a significant coast for them and they can attempt to lock in large right now while its down.

This move really makes no sense. Unless our American overloads phoned it in to make it happen.

Post: #13

Post: #14

The Canadian economy breakdown.



Mining and Oil and gas have a massive influence to many of the other sectors (construction, finance, real estate etc).

Post: #15

A lower Canadian dollar / Loonie means that Canadian exports are more competitive, leading to higher GDP growth, and imports less competitive. That would largely help out Ontario/Québec/Nova Scotia/New Brunswick where manufacturing is based, but probably Manitoba and British Columbia too (which do not have oil).

There's a couple housing bubbles too - Toronto, Vancouver, Calgary, Hamilton, etc. The Calgary one should pop, but if the other ones don't (i.e. manufacturing rebounds enough to save massive drops in prices and construction), Canada at large could survive a soft-landing without a technical recession.

Now, the Conservative government is trying to balance the budget since there's an election coming up in October, so there's likely going to be no fiscal support like there was in 2009. OTOH, Harper is already following the opposition's economic playbook, so he might try to stymie the recession in its heels instead.

Montréal should be a top destination for summer game.

Post: #16

Canada had serious growth in the 70s and 80s, in Toronto at least.

Wages have been stagnant since then and the average person does not have money only credit.

Our politicians have sold the country out.

Post: #17

As someone that intends to put my money into USD, this sucks so damn bad. I remember when CAD and USD were nearly par. Now if I want to put my CAD in USD I'm losing nearly a quarter of it. Looks like my money is going to be sitting up here for a while...

Post: #18

(01-21-2015 06:44 PM)kosko Wrote:  You would think the idea would be to raise it to lure in capital into our markets.

... oh wait Canadians are over-extended on debt and even a .25% hike would drown people.

But the money mind in me would think that would be the better move. Industry has fat piles of cash. Corporations in Canada are swimming in money and Industry has had cheap debt to purchase new innovation and equipment, bleak energy prices help them too as fuel is a significant coast for them and they can attempt to lock in large right now while its down.

This move really makes no sense. Unless our American overloads phoned it in to make it happen.

Central banks around the world are lowering rates to combat deflation. It hasn't been working, so some of them have moved on to debt monetization.

Post: #19

Sounds a lot like what's happening in Australia.. i will be following the outcome of Canada's decision closely as the Reserve Bank of Australia is also considering cutting interest rates in the first half of 2015. Our dollar is almost below 80c US, prediction is it may hit 70c sometime this year..

Post: #20

Does anyone know the cheapest way to invest in currency (lowest fees)? There's PayPal which is super easy or a futures trading account. I would assume the futures account would be better but not sure..

Post: #21

^^Any forex trading platform. Oanda is good. They're designed for active traders, but you can leave a position open as long as you like.

Post: #22

1.26 USD/CAD last check today.