High sales levels spur rise in home values

December 6, 2009

VANCOUVER – Strong demand has led to a steady rise in Greater Vancouver home prices compared to last year.

Over the last 12 months, the MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver increased 6.8 per cent to $553,702 from $518,668 in October 2008.

“While home prices have been rising in 2009, they have not eclipsed the peaks reached in early 2008,” Scott Russell, Real Estate Board of Greater Vancouver (REBGV) president said. “We’re coming off several months of unseasonably high sales levels, which has allowed for a gradual increase in home values this year,” Read more

Bank of Canada maintains interest rates

December 6, 2009

The Bank of Canada held its benchmark overnight lending rate steady at 0.25 per cent at its setting on October 20th, 2009. The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, remains at 0.5 per cent.

The Bank acknowledged that recent indicators point to the start of a global recovery, and that economic and financial developments have turned more favourable than it had previously expected. While recognizing that the Canadian economy is rebounding, it expects the recovery to be weak by historical standards. Read more

Canadian economic growth’s lost decade

November 11, 2009

OTTAWA — It may one day be remembered as the lost decade, in economic terms, The Canadian Press

A new report published by the TD Bank says Canada is headed for a decade of stagnant growth that will test the budgets of Canadian households and governments alike.

The bank says a combination of post-recession adjustments, the aging population and low productivity will limit Canada’s potential growth to about two per cent over the next 10 years.

That is two-thirds the level of growth experienced the previous two decades, the report says.

And it could be even more muted than that. The bank said the ”other elephant in the room“ that could further depress economic growth is the measures governments may adopt to control climate change. Read more

Are Canadian Banks Setting the Country’s Interest Rate Policy?

October 17, 2009

When it comes to economic policy, many people believe that big business – particularly the large banks – have an undue influence that they manage to wield to their advantage. One need only google “Goldman Sachs Conspiracy” to read all about the supposed “shadow government” controlled by the venerable investment firm. Nevertheless, events transpiring in Canada this week hint that even the country credited with having the world’s “best” banking system, may also have its share of power brokers calling the shots behind the scenes.

Read the article here.

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2.5% Overnight Lending Rate by 2011

October 14, 2009

CBC News, October 9, 2009

The Bank of Canada will push its benchmark interest rate to 2.5 per cent in the next year and a half, an economist with the Central 1 Credit Union predicted Friday.

The rate is now at 0.25 per cent and the central bank has said it will likely stay there until the spring of 2010. Helmut Pastrick, chief economist with Central 1, told CBC News the recovery remains on track, with only occasional data suggesting a setback.

He looked at gains in U.S. housing, manufacturing and government stimulus and predicted the next report on U.S. Gross Domestic Product will show the American economy started growing again this fall, perhaps by as much as four per cent, for the first time in more than a year. Read more

Hot housing market could trigger rate hikes: TD

October 7, 2009

OTTAWA — The possibility exists that the Bank of Canada may have to break its conditional pledge on interest rates should the housing market continue its red-hot performance, economists at Toronto-Dominion Bank said Tuesday.

“The Bank of Canada will likely be watching developments in Canadian real estate quite closely,” say economists Craig Alexander and Grant Bishop. “If surging existing home sales do not cool, the bank may be inclined to respond.”

Read the full article here.

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Will other central banks follow?

October 7, 2009

 Elliott Wave International published the following update:

On October 6, the Reserve Bank of Australia surprised the global financial community with a .25% interest rate hike, bumping it up to 3.25%.

Almost no one expected a major central bank to raise rates amidst the ongoing financial crisis. That’s why the RBA’s decision “was largely interpreted as a sign that the Australian central bank is confident in an economic recovery.” (RTT news)

Read the full article here.

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Get ready for steep rate hikes in 2011: economist

September 11, 2009

Paul Vieira, Financial Post

OTTAWA — When the Bank of Canada does start raising its key policy interest rate in either late 2010 or early 2011, Canadians should brace for “aggressive” increases of up to a percentage point at a time, says a report from the chief economist at Laurentian Bank Securities.

The call, from Carlos Leitao, adds a new wrinkle to the debate as to whether the central bank will be able to keep its pledge to leave its key policy rate at 0.25%, or the lowest level possible, until June 2010 in an effort to stimulate the economy. This analysis kicks off a debate in terms of how aggressively the central bank needs to act once it believes rate increases are in order. Read more

Recession ain’t over ’til the consumer sings

July 31, 2009

Garry Marr, Financial Post with files from Paul Vieira  Published: Thursday, July 23, 2009

There are at least 1,592,000 Canadians who don’t believe the recession is over.

Benjamin Tal, senior economist with CIBC World Markets, says consumers – including the almost 1.6 million unemployed – are unlikely to be overjoyed by the Bank of Canada’s pronouncement Thursday that the recession is all but over.

“This is a technical economic recovery and something only economists get excited about,” said Mr. Tal. “Does it mean unemployment will go down? Will it be easier to get a job? For the average person, it’s not over and it won’t be over until it’s easier to get a job.” Read more

BoC may have to break interest rate promise

July 29, 2009

 Alia McMullen, Financial Post   Published: Thursday, July 23, 2009

TORONTO — The Canadian dollar hit a 10-month high Monday amid growing risk appetite and rising expectations that inflation will ultimately force the Bank of Canada to break its promise to keep interest rates on hold until mid-2010.

“The time for tightening is not yet at hand, but June 2010 seems too late,” said Yanick Desnoyers, the assistant chief economist at National Bank Financial. “The day when the condition for the Bank’s low-rate commitment is no longer met will probably come before then.”

Mr. Desnoyers said the benchmark interest rate had been lowered to a record low of 0.25% to limit the damage of the recession and financial crisis. Read more

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