Bank of Canada Rate Cut

[errolanderson]

Bank of Canada cut their key lending rate 1/4% to 0.5% this morning.

And according to the gov't, Canada isn't even in-a-recession.

[cottonpicken]

Jesus when are people going to wake up.

[errolanderson]

Janet Yellen making statement today on pending U.S. September rate hike.

Has she painted herself into a corner?

[cottonpicken]

She may hike 50 points ceremonially but agree they are in a corner with no way out. Just at the japs 200 points and 100% of tax revenues goto interest payments.

[errolanderson]

Cotton . . . (IMO) if she hikes rates in September, the U.S. dollar will continue to soar cutting into American manufacturing and exports even further.

The Fed could ignite a U.S. recession quickly with bad timing and ideas that the U.S. economy can go it alone growth-wise in a deflating global economy. They are badly mistaken (IMO).

Consumer spending (70% of the U.S. economy) continues to slow stateside.

[hobbyfrmr]

I am still mixed emotions on this subject. Part of me wants to borrow and buy a house in a city while interest rates are low, and part of me is concerned that eventually the govt will wake up, raise interest rates and leave me in economic discomfort!
If there is a substantial increase in interest rate, that leaves something like 60% of the entire population of Canada in discomfort. My property will have to go down in value because the gig will be up and people will realize they truly can not afford to buy and over priced house!
Then the other message I hear is, "they" cant afford to raise interest because it will place too much economic hardship on Canadian citizens.
I am confused!

[errolanderson]

hobby . . . my opinion

'keep your powder dry'

the world has to go though so much credit deleveraging before there is any remote hint of rate hikes. if the U.S. wants to hike rates like the good ol days, have-at-er.

[sumdumguy]

They will pump the price of houses until cablooey! Crazy!

[boarderbloke]

Isn't cutting interest rates here in Canada much like a hail mary pass? The gov't hoping we won't be in recession during the campaign this fall, or atleast election day. Housing may continue rather than collapse, dollar will likely drop with hopes of continued exports, preferably to the USA.
Canada may be hoping Yellen raises rates, the CAD would drop even more with the hope of continued sales or growth in sales globally.
Heard Iran will now be able to increase crude exports(with the sanctions being lifted), if they double sales or more, that won't help with crude prices.

Grain growers will have to capture more of the currency exchange from grain sales if they're going to be able to afford fertilizer.

[errolanderson]

sumdum . . . I must learn to be quiet, but this is bugging me too much.

You are so right. This cut will continue to balloon real estate and force investors into higher risk investments. What are central bankers doing?? And what is the end game??

[BreadWinner]

With the price of everything going up the end result is the same as inflation, It takes more dollars to purchase the same goods. Controlling inflation without causing recession is almost impossible. The only way to control it is with interest rate hikes and that is impossible with the huge amounts of household debts. Im afraid low interest and expensive goods are the new normal.

[Richard5]

What I don't understand is this:

Do people and government really think interest rates make that big of difference in consumer purchases? I would understand this more when we were at prime rates of 4-6% but when it gets down to where it is now, .25, .15% don't mean anything significant in the total purchase price at the end of the day. Besides, you really don't get the same rate at the consumer level.

I believe this especially with farms. With lease debt interest rates don't mean a thing (imo). Too many fixed on the "show" and the tax

[charliep]

I see the loonie is testing 77 cents. That to me means support has been broken. And just ahead of when I go to Montana. Ouch.

[vvalk]

Sounds like the banks are only passing .1 of the .25 on. So now with 2 cuts te bank have pocketed half the drop

[cottonpicken]

The cost of borrowing effects everything.

And it's not like soverign bonds get paid off they get rolled over and repurchased. At ever lower rates so percentage government expenditures have been actually decreasing.

Now through in the banking and bonds in themselves. If rates went to 18 tommorrow what is a quarter of land worth?what is a 2 percent bond worth?overleveraged banks meaning all of them are flushed. The whole system demands inflation one way or another.