Translation: Cautiously optimistic means: “We’re a little worried…sort of but not really” Clear?
Many reports shot out this morning in advance of the BoC announcement with the expected news that the BoC was going to maintain their 0.5% overnight lending rate. Many local experts were calling for a quarter point decrease to help stimulate a lagging Canadian economy.
Stephen Poloz – Governor of the Bank of Canada says:
“We’re seeing the resource sector shrink as the non-resource sector expands mainly due to the drastic decline in oil prices and significant reduction in exports to the United States”
He further went on to say: “Major structural changes like this can take up to 3 years before we see any real changes in the economy”
Despite the uncertainty in the 2016 Canadian economy (trending after a lagging Q4 2015), Governor Poloz said: “The Global Economy will strengthen due to stimulative policies and reduced energy costs” and therefore determined that the Canadian Economy was resilient enough to absorb these major structural changes and the declining value of the Canadian Dollar. Meaning, a interest rate decrease isn’t necessary.
Even if the overnight lending rate was decreased we don’t believe the big banks would have passed on the savings to us anyway. There are markets in Canada that could use lots of stimulation but Toronto isn’t one of them. A further reduction in rates by the banks would add unnecessary fuel to the fire and negate any measures the Feds took to try and cool our heated real estate market.
What does this mean to you? If you’re not in the market to either buy or sell real estate then it means nothing. If you’re a Buyer on the hunt you already know it’s a tough battle out there with very little inventory for you to choose from and if you’re a Seller you’d better have a really good reason to move because it’s getting quite expensive for you to trade up. We’re seeing a lot of lateral moves and down sizing into apartments by Sellers now as they use this opportunity to release their equity tax free and re-invest in things like retirement and debt payment.
We’d love to hear your thoughts in the comments below, via our live chat to the bottom left or just contact us to talk.
