The Canadian Centre for Policy Alternatives is under attack by Revenue Canada simply because it finds good reason to criticize a government action or in this case inaction.
The Bank of Canada’s latest move is less surprising than you think
Canada’s financial industry and its associated analysts reacted with shock and dismay to the Bank of Canada’s announcement this week that it was lowering its trend-signalling interest rate from 1.0%, where it had been pegged since 2010, to 0.75%.
While they might have valid business reasons for their response – after all, virtually all of them had been advising their clients, employers, and shareholders that rates were likely to go up, not down, in the next few months, they shouldn’t have been surprised.
The gap between Canadian and U.S. interest rates created by the announcement should be widening.
The U.S. economy is doing better than Canada’s and is likely to outperform Canada’s in the intermediate future. Low oil prices have less of a downside in the U.S. than they do in Canada, along with an equally powerful upside.
The Canadian dollar should be declining in value. It was grossly overvalued when its premium relative to the U.S. hit 10%. With the drop in oil prices below production costs in much of Western Canada, even a value in the high 80-90 cent range was excessive.
But there’s another reason why people shouldn’t be surprised that the Bank of Canada acted so decisively and so early to respond to clear signs of economic weakness.
Read More: http://behindthenumbers.ca/2015/01/22/the-bank-of-canadas-latest-move-is-less-surprising-than-you-think/
Thanks Ed
While they might have valid business reasons for their response – after all, virtually all of them had been advising their clients, employers, and shareholders that rates were likely to go up, not down, in the next few months, they shouldn’t have been surprised.
The gap between Canadian and U.S. interest rates created by the announcement should be widening.
The U.S. economy is doing better than Canada’s and is likely to outperform Canada’s in the intermediate future. Low oil prices have less of a downside in the U.S. than they do in Canada, along with an equally powerful upside.
The Canadian dollar should be declining in value. It was grossly overvalued when its premium relative to the U.S. hit 10%. With the drop in oil prices below production costs in much of Western Canada, even a value in the high 80-90 cent range was excessive.
But there’s another reason why people shouldn’t be surprised that the Bank of Canada acted so decisively and so early to respond to clear signs of economic weakness.
Read More: http://behindthenumbers.ca/2015/01/22/the-bank-of-canadas-latest-move-is-less-surprising-than-you-think/
Thanks Ed
No comments:
Post a Comment