Tuesday, July 21, 2009

Bank of Canada maintains key lending rate


OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.
The global economy has suffered an intense, synchronous recession and considerable excess supply has opened up. There are now increasing signs that economic activity has begun to expand in many countries in response to monetary and fiscal policy stimulus and measures to stabilize the global financial system. However, the recovery is nascent. Effective and resolute policy implementation remains critical to sustained global growth.
The dynamics of the recovery in Canada remain broadly consistent with the Bank's medium-term outlook in its April Monetary Policy Report (MPR). Stimulative monetary and fiscal policies, improved financial conditions, firmer commodity prices, and a rebound in business and consumer confidence are spurring domestic demand growth. However, the higher Canadian dollar, as well as ongoing restructuring in key industrial sectors, is significantly moderating the pace of overall growth.
Some of the early strength in domestic demand represents a bringing forward of household expenditures, which modestly alters the profile of growth over the projection period relative to the April MPR. The Bank projects that the economy will contract by 2.3 per cent in 2009 and then grow by 3.0 per cent in 2010 and 3.5 per cent in 2011, reaching production capacity in the middle of 2011.
Total CPI inflation declined to -0.3 per cent in June and should trough in the third quarter of this year before returning to the 2 per cent target in the second quarter of 2011 as aggregate supply and demand return to balance. Core inflation held up at 1.9 per cent in the second quarter of 2009. The Bank still expects core inflation to diminish in the second half of this year before gradually returning to 2 per cent in the second quarter of 2011.
While the underlying macroeconomic risks to the projection are roughly balanced, the Bank judges that, as a consequence of operating at the effective lower bound, the overall risks to its inflation projection are tilted slightly to the downside.
Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target. Consistent with this conditional commitment, the Bank will continue to conduct longer-term Purchase and Resale Agreements based on existing terms and conditions and according to the accompanying schedule.
The Bank retains considerable flexibility in the conduct of monetary policy at low interest rates, consistent with the framework outlined in the April MPR.
Information note:
A full update of the Bank's outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 23 July 2009. The next scheduled date for announcing the overnight rate target is 10 September 2009.


Monday, July 20, 2009

Getting the Best Mortgage Rate

Globe and Mail update and Investor Education Fund Monday, Jul. 13, 2009 10:45PM EDT
Robert McLister, author of the Canadian Mortgage Trends blog and a mortgage planner, talks to Rob Carrick about finding a better rate for your mortgage

Click on the link below to view the video:

Tuesday, July 7, 2009

Beyond boom and bust

From Monday's Globe and Mail Last updated on Tuesday, Jul. 07, 2009 07:31AM EDT

Unlike many other jurisdictions, Alberta can expect a reasonably speedy recovery from the global recession. The question is whether the toll exacted by the current turmoil will cause Canada's richest province to better prepare for future twists and turns, rather than simply riding the fortunes of its natural-resources industry.
Ed Stelmach, the Alberta Premier who has been cast even by some within his own Progressive Conservative Party as a hayseed, would seem an unlikely candidate to succeed at long-term economic planning neglected by some of his predecessors. But last week, Mr. Stelmach announced a serious attempt to come to grips with the province's economic prospects, appointing a blue-ribbon panel to help shape forward-looking public policy.
"It's to look well ahead to see whether the policies we have today will still serve us well into the future," Mr. Stelmach said in explaining the committee's purpose. "What are the challenges and opportunities that will define Alberta over the next three or four decades, and what conditions should the government put in place over the next three to four years?"
With such an ambitious mandate, there are no assurances that the panel will be able to get beyond the abstract, to put forward ideas that are practical for the government to implement. But Mr. Stelmach has given it a fair shot by attracting some of the best policy minds in the country. David Dodge, formerly the governor of the Bank of Canada and a federal deputy finance minister, is considered by some people to be Canada's top economist. Former foreign affairs minister David Emerson, who will chair the panel, is a leading expert on international trade.
The 12-member panel is not without strong Alberta representation, including former federal minister Anne McLellan and Jim Gray, a former oil executive who chairs the Canada West Foundation. But it speaks well of Mr. Stelmach's aims that he looked outside both his party and his province. With the provincial Conservatives facing little political competition, Alberta's government risks suffering from a paucity of fresh voices and ideas. People such as Mr. Dodge and Mr. Emerson will bring a new perspective, and help the province's challenges to be understood within a broader context.
The decisions Alberta makes in the next several years on everything from regulatory policy and taxation to areas of investment will help determine whether it is able to break the boom-and-bust cycle and enjoy consistent, long-term prosperity. The consequences of failing to manage the energy industry's growth, to improve Alberta's environmental record and diversify its economy, would likely not be felt until long after Mr. Stelmach leaves office. Given the degree to which the country's economic future rests upon the health of its wealthiest province, Canadians should be heartened that Mr. Stelmach is nevertheless trying to break from a pattern of short-term thinking.