Posthaste: Canadians could see record low interest rates until 2022 - Financial Post

singkrata.blogspot.com

Good Morning!

With the Bank of Canada to decide on interest rates this Wednesday, just about everybody agrees rates will stay at the record low 0.25%. But for how long can we expect rates to remain this low?

A new survey of 15 economists from Canadian banks, financial institutions and academia suggest that 0.25% could be around for more than a year, maybe two.

Almost half of the economists in global comparison site Finder.com’s survey see rates holding for more than a year until the end of 2021, while 26.67% believe rates will hold until the first half of 2022 and 13.3%, the second half of 2022.

The Bank of Canada has cut its key overnight interest rate three times since the crisis started and Governor Stephen Poloz suggested last week that even after the pandemic ends rates will stay low.

“We are in an era where interest rates are probably going to stay low, for demographic reasons and economic growth reasons. I don’t know how low really but they’re just not going to be like where they were 20 years ago or 30 years ago,” Poloz said.

Though the Bank has maintained that 0.25% is the effective lower bound, one economist in Finder’s survey thinks it should experiment with smaller than usual cuts, without reaching 0%, to see if this stimulates the economy.

“The Bank is worried about pushing below its effective lower bound. I think it should be unconventional in these unconventional times and try a 10 bps decrease and see what happens. It can move incrementally until it really does reach the lower bound,” said Moshe Lander, professor of economics at Concordia University.

Here are some of the survey’s other findings

Real estate

There’s been a lot of debate over how the coronavirus crisis will impact the housing market, but most agree we are in for declines. Averaging out the responses of the economists on a percentage drop in Canada’s 10 biggest markets, came up with these predictions.

• The biggest drops are seen in Vancouver and Toronto at 12.65% and 12.55%, respectively.

• Cities set for declines between 8% and 10% include Montreal (9.55%), Calgary (9.40%), Hamilton (8.70%), and Edmonton (8.60%)

• More modest declines are expected for cities like Ottawa (6.40%) Quebec City (5.40%), Halifax (4.90%) and Winnipeg (4.70%).

Border closures

The majority of the 15 panelists say that Canada would open its border to international travellers this year. Only two said borders will remain closed until 2021. Half of the panel believes borders will open within two to four months and 21% believe they will open sooner, within one to two months.

Six-month economic outlook

The panel, understandably, was overwhelmingly negative about the outlook, Finder said. About 46% were positive on home affordability (that’s up from 9% at the beginning of the year), but the majority, 73%, were negative on wage growth and household debt. Almost half were positive about employment as the economy gradually reopens.

The good news

Eighty per cent of the economists believe it is unlikely that this recession will evolve into a depression, because of “massive stimulus efforts.”

“Ongoing reopening plans suggest a controllable second COVID-19 wave which could keep away the severe option of going back in quasi-complete shutdown mode like we observed in late March,” said Sébastien Lavoie, chief economist at Laurentian Bank.

_______________________________________________________

FOR YOUR VIEWING PLEASURE Just in case you wondered what it would be like to go to a movie again have a look at these film-goers as they wait for the show to start Thursday in Sarajevo. Movie theatres and shopping malls here were reopened this week after a two-month lockdown to suppress the spread of COVID-19. Out of the 190 seats in the theatre only 34, marked by black caps, are to be used to order to maintain social distancing. Elvis Barukcic/AFP via Getty Images

_______________________________________________________

• U.S. Federal Reserve Chairman Jerome Powell is scheduled to participate via webcast in Griswold Center for Economic Policy Studies Princeton Reunions Talk: A Conversation with Jerome Powell, moderated by former Fed vice chair Alan Blinder.
• Citigroup Inc Chief Executive Michael Corbat will speak at Bernstein’s 36th annual strategic decisions conference, where analysts will be looking for more details on how the COVID-19 pandemic has impacted business.
• Today’s Data: Canadian GDP (Q1), Canadian industrial prices, U.S. personal income and spending, University of Michigan consumer sentiment index
• Notable earnings: Canadian Western Bank, Laurentian Bank of Canada, Canopy Growth

_______________________________________________________

_______________________________________________________

Canadian consumer confidence is in the dumps on a global scale, the chart by Refinitiv and Capital Economics below shows. In the U.S., the Conference Board measure was just 0.2 standard deviations below its 10-year average in May. In Canada, consumer confidence is a full eight standard deviations below its 10-year average, said Capital. What’s making Canadians especially pessimistic? Could be the housing market. Recent data and predictions of a coming decline in housing prices have taken the edge off what appeared to be a slight lightening of the mood in recent weeks. The Bloomberg Nanos Canadian Confidence Index this week found that Canadians are starting to feel a little better about the economy — but not about the housing market. Almost half of survey respondents anticipate a drop in home prices, which is a record and about three times above the average for this question.

____________________________________________________

These days Canadians need all the help they can get. Postmedia Content Works helps you tap into government aid, pointing you to all the programs now available from mortgage deferrals to CERB. But what about when aid runs out? Content Works has you covered with three ways to develop new sources of income whether it’s a side hustle or a new career. Get it all here 

____________________________________________________

Today’s Posthaste was written by  Pamela Heaven (@pamheaven), with files from The Canadian Press, Thomson Reuters and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com, or hit reply to send us a note.

Let's block ads! (Why?)

"low" - Google News
May 29, 2020 at 08:12PM
https://ift.tt/2XeFh0n

Posthaste: Canadians could see record low interest rates until 2022 - Financial Post
"low" - Google News
https://ift.tt/2z1WHDx


Bagikan Berita Ini