National Economy

[Innsertnamehere]

Yea, I expect rate cuts to be pretty rapid and people are already more confident now that the rate cut cycle has been confirmed.

If we get another cut in July (I suspect we will), things will speed up even more as actual borrowing costs will actually start to be noticeably cheaper and it's a sign the BoC is going to cut quickly.

I'm a lot less stressed about my mortgage renewal next summer than I was before. Shouldn't be too bad of an increase, I don't think.

[shreddog]

Originally Posted by Innsertnamehere

Yea, I expect rate cuts to be pretty rapid and people are already more confident now that the rate cut cycle has been confirmed.

Given that the US Fed intend only 1 cut this year and no (current) intention to accelerate that in 2025, if Canada does start dropping rates, it may be a good time to invest in USD assets.

[WarrenC12]

I'm not sure Canada will be in a rush to cut. Maybe 1 more this year.

[Innsertnamehere]

Originally Posted by shreddog

Given that the US Fed intend only 1 cut this year and no (current) intention to accelerate that in 2025, if Canada does start dropping rates, it may be a good time to invest in USD assets.

The BoC has indicated that they aren’t too worried about diverging from the US fed on rates, to a certain extent.

CAD is likely going to be very low for a bit until the US catches up on lower rates.

BoC rarely makes one cut and leaves it. I suspect we’ll see 0.25 cuts quite frequently, if not every month, for the next little while. A 0.25 cut is ultimately quite small and not overly consequential. The BoC knows this.

[1overcosc]

Originally Posted by Innsertnamehere

The BoC has indicated that they aren’t too worried about diverging from the US fed on rates, to a certain extent.

CAD is likely going to be very low for a bit until the US catches up on lower rates.

BoC rarely makes one cut and leaves it. I suspect we’ll see 0.25 cuts quite frequently, if not every month, for the next little while. A 0.25 cut is ultimately quite small and not overly consequential. The BoC knows this.

A low CAD will drive inflation higher due to import costs, so there's a hard limit on how much we can diverge from the US on interest rates.

If we make another 3-4 0.25% cuts and the US does nothing, the resulting drop in CAD will drive inflation higher to the point where can't make cuts anymore or possibly even a rate hike is justified.

IMO, we shouldn't be cutting rates at all. Inflation is still too high. IMO, we should actually lower the inflation target from 2% to 1% for the next few years to cancel out the above-target inflation in the early 2020s.

Besides, higher rates are a good thing. It pushes people & companies to reduce debt (which is unsustainably high), encourages saving, and reduces asset inflation.

[P'tit Renard]

Originally Posted by Innsertnamehere

The BoC has indicated that they aren’t too worried about diverging from the US fed on rates, to a certain extent.

CAD is likely going to be very low for a bit until the US catches up on lower rates.

BoC rarely makes one cut and leaves it. I suspect we’ll see 0.25 cuts quite frequently, if not every month, for the next little while. A 0.25 cut is ultimately quite small and not overly consequential. The BoC knows this.

I'd be mindful of the fact that the BOC can only diverge so much from Fed rates if there's no CAD uplift from oil and resources. An improving economy also serves as a headwind to cutting rates, since theoretically it will spark inflation if the currency is depreciating at the same time.

[LeftCoaster]

Originally Posted by ssiguy

Bad new for Musk and Greenies everywhere. A new global report released just a couple days ago and reported in Automotive News found that of current EV owners, 29% globally want to go back to an ICE vehicle and that number soared to 46% in the US.

Now that the novelty of 100% EVs for the more well healed has subsided, reality is kicking in. From high prices, to impracticality, unreliability, limited range, battery drainage in both very hot and very cold climates, poor recharging infrastructure {both availability and maintenance} to plunging value as soon as they leave the lot, EVs are not the panacea they thought they were going to be.

That said, EVs do have good long-term prospects but right now, the technology simply isn't good enough to makes them affordable, practical, and reliability for the vast majority of buyers.

Bad news for greenies?

A "global report"??

You sound like my 78 year old uncle telling me what he read on facebook last week.

[Innsertnamehere]

Originally Posted by 1overcosc

A low CAD will drive inflation higher due to import costs, so there's a hard limit on how much we can diverge from the US on interest rates.

If we make another 3-4 0.25% cuts and the US does nothing, the resulting drop in CAD will drive inflation higher to the point where can't make cuts anymore or possibly even a rate hike is justified.

IMO, we shouldn't be cutting rates at all. Inflation is still too high. IMO, we should actually lower the inflation target from 2% to 1% for the next few years to cancel out the above-target inflation in the early 2020s.

Besides, higher rates are a good thing. It pushes people & companies to reduce debt (which is unsustainably high), encourages saving, and reduces asset inflation.

Thus “to a certain extent”. We aren’t going to see the BoC cut 200 basis points without the Fed starting cuts as well. 75-100 though? Definitely possible. It’ll put pressure on inflation, but elevated rates themselves do that through mortgage rates driving up housing costs.

[Build.It]

A weak Canadian dollar is generally good for Canadian manufacturers - both in the Canadian and US export markets.

[ssiguy]

Originally Posted by Build.It

A weak Canadian dollar is generally good for Canadian manufacturers - both in the Canadian and US export markets.

Yes, a cheap Loonie is good for exports but only over the short-term. Our businesses begin to rely on it as a economic crutch much like they do now with cheap imported labour. We are not competing because our productivity is high but rather because our expenses are low..............a true race to the bottom.

A cheap Loonie also inhibits businesses from investing in new technology and the workers they already have because, once again, they use the cheap dollar as their only way to compete on the international export market. As noted above, a cheap dollar also stocks inflation as it increases the prices of all imports.

[Loco101]

Can someone copy and paste the economic charts from this: https://www.atlanticcouncil.org/blog...the-g7-summit/

Interesting data.