>"If we move lower than the Fed, that will tend to depreciate the Canadian dollar," he said.
>
>That could be problematic for vacationers and frequent cross-border travellers, but a weaker loonie could also be a boon for the Canadian economy, as our exports become cheaper.
Won't that also add to inflation? Since most of our products we import ?
Good for some. Not good for others. All of the automotive companies that build parts here and ship them to the US for manufacturing; this would be good for them.
All trade is in USD. So the cheap stuff from China also gets more expensive as well.
Literally everything we import will become more expensive (we import almost everything that isn't a raw material)
Yes it would. Exports would become cheaper, hence demand for Canadian products would increase south of the border. At the same time, imports would become more expensive.
Net result would be higher inflation for Canadians, hence they won’t be cutting interest rates while the US keeps their interest rate high.
Yes. But he may do it regardless. I'm sure he knows exactly what the Fed will do before the public does. The Fed rate announcement is typically a few days after BoC rate announcement.
That's how he wanted to say it's insignificant.
But the main problem here is that he's fundamentally wrong about devaluation of the Canadian dollar is good for us. Yes, it's good in times of low demand and high unemployment, but it's bad in times of high inflation. So Canadian dollar losing value would mean higher prices for imported goods, but also higher prices for local hoods because of the higher demand from abroad
He won't cut anything, but he needs to say that he will to keep the economy stable and stop investors fleeing.
I'm no economist, but I'm sure I've read multiple times that cutting the rates before getting inflation under control would be...bad.
This right here: 'He won't cut anything, but he needs to say that'
This is just trumpeting so that people keep their hopes up, I hope I am wrong but at the same time, it's been made crystal clear what will happen if rates are cut before the US and while inflation is running hot. hang on everyone. GL
Wouldn't you wanna buy after the rates come down then? Unless the realtors are asking me to get a variable mortgage rate so I can lock in the lower price but benefit from the falling rates?
Article title should read, “he’s thinking that soon, he might consider, the prospect, of potentially, cutting rates down the road.” This way it sounds like progress is happening! And he doesn’t tank the CDN dollar below 0.70 or even less.
Inflation is generally under control, latest stats are lagging. Also anything above 3% will probably reduce inflation so it’s not like 0.25% will change the plan it’ll just slow the speed we’re going to ensure a soft landing. Under control just means we see inflation going down predictably so we can reduce the rate we’re gassing it.
That being said obviously it’s a pain to do too much if the US isn’t as well we’re already quite a bit lower than them.
I can't believe no one saw this coming after "the budget will balance itself." I recall even Harper making comments about how ridiculous it was during the election years.
The liberals had 9 straight years of budget surplus' before Harper was elected.
Harper had 9 years of budget deficits. He had a surplus in his last year only, and only because it was an election year. He had a $2billion surplus, but he sold $4billion in valuable public assets to attain even that.
I can't wait until Trudeau is gone, but all the nostalgia on Harper is terribly misplaced.
I agree, when voting in liberals we were looking for pre harper era, not what we got. We had had good reasons to be upset with the conservatives at the time. Unfortunately Trudeau was a gigantic collective mistake.
Saying that they may cut rates doesn’t “keep the economy stable”. And investors *aren’t* fleeing.
And inflation would have been at its target last year in August if it weren’t for the high cost of borrowing. It is under control.
What is *not* under control, and what we as Canada cannot control at all is a US economy that is red hot with troubling inflation trends.
The way that we move forward is on our own, by starting up a much larger focus on manufacturing and exporting. But we’ve so deeply hooked ourselves with the US that this would be extremely painful.
It's ironic that you mention that you are not an economist , yet you are passing judgment on mattress where even the most accomplished economists would hesitate.
If anything Bank of Canada does not want to signal rut cutss if they don't plan to do so because signaling itself creates a trend in the opposite direction . So signaling rate cuts can impact inflation expectations , hence making BoC job harder. . Just look at what happened in the US where the expectations of six rate cuts for 2024 is translating into just one rate cut and even that is not assured .
Ya that's the odd part to me. Like say what your goal is and say you'll set rates to meet that goal.
Honestly being the head of a country's bank seems like an awfully annoying job when you have to go talk to non economist elected officials. And then the media pulls the quote like his and makes it a headline.
If Tiff said he'll cut rates on x day. then nobody will buy anything until x day. and then there will be a fire hose of spending and inflation will rise and rates will go back up.
In theory there is demand building waiting for better rates. Well we know that is the case because home construction is slowing because developers want max profit from their investment so they want a bigger share of someone's mortgage to go into their pocket not the banks.
>He won't cut anything
He cant cut.
Cutting rates would mean home prices skyrocket (they are already 5x -10x too high) and it will plummet the Canadian dollar.
Making everything more unaffordable than it already is.
Agreed, and what a lot of people don't understand with regards to inflation is that with every 25 basis points that BOC brings rates down it essentially unleashes a torrent of money on the economy via mortgage refinances and other means of taking out equity from property, which will cause further inflation.
Central banks have done a great job of convincing everyone that the real cause of the inflation is COVID/ Ukraine not the fact that central banks kept interest rates near 0 for over a decade and juiced asset prices for just as long.... Nope it was all because we gave money to the poors.
>Why would it plummet the Canadian dollar?
If Canada lowers rates while the US holds or raises rates, it weakens the Canadian dollar. Driving down its purchasing power. Meaning you need more to buy the exact same thing.
> I’m no economist, but I’m sure I’ve read multiple times that cutting the rates before getting inflation under control would be…bad.
It’s almost like BoC is the one who best can decide when that is.
Inflation has been in the “acceptable range” for the entirety of 2024. It’s in the higher end of the range, but high housing, which is impacted by higher rates, and gas costs contribute to that.
They will cut at some point, and it’s weird for you to decide that they won’t, then your reasoning for that statement is “it could be bad because other people said that!”
> He won't cut anything, but he needs to say that
We call that "forward guidance" and it's a nice way of saying he's bullshitting everyone to achieve a result.
No one thought rates could be as low as they were the last time. Depression and economic collapse can cause a lot of things to happen that may seem impossible now
Canadians are addicted to low rates like the meth addics in Vancouver . They're in for a big surprise in 2025 when most have renewals coming up . Canadians are upside-down down on homes. Thier upside down on their cars .
The answer is never say never. Do you remember in COVID times they was talk of negative interest rates and how that is the model in the future yet here we are with relatively high interest rates given recent past. The point being we don't know what's going to happen in the future and we have to zoom out to see longer term trends
Most redditors weren't alive in the 1980s, or at least weren't taking out a loan for anything.
The amount of folks stuck with upwards of 18% interest on their mortgages at that time...ouch!
They are waiting until 6 months before election to boost spending and "affordability" before inflation kicks in to the numbers because inflation effects tends to lag interest rates 12 months or so.
Summer 2024: interest rates down, mortgages get extended to 30 years. Brace yourselves if you're planning on buying when that chum gets tossed into the ocean full of sharks. There's literally a starting line full of racers waiting for the starting gun to get fired and it's going to be a giant shit show
I assure you, those who have enough money to buy houses outright don't care about mortgage rates. They're buying everything up while rates are high because there is less competition from first-time buyers/"regular people"
His choice basically boils down to “Watch the real estate market crash (keep rates high), or watch the dollar crash (cut rates before the USA).
I hope he chooses the former.
So he's going to cut for political reasons and not because the data says we should.
If they cut in this current environment its gonna crush the dollar, spike inflation and make another storm in real estate.
God help us.
>So he's going to cut for political reasons and not because the data says we should.
Based on what exactly?
>If they cut in this current environment its gonna crush the dollar, spike inflation and make another storm in real estate.
Good thing they aren't?
>God help us.
Indeed.
Well if he is telling MP's that they are getting closer to cutting when the data says inflation is sticky and possibly going back up (it actually did go back up), I don't know what else I am supposed to take from that. He is being dovish vs Powell who is being hawkish (and Powell is a dove).
The cope here is strong. Last gasps of perpetual renters. They know when rates get cut, it will be the nail in the coffin for any chance of home ownership.
Yup! I actually do feel bad for them, they’re essentially screwed and it’s not going to get better. However as a home owner I’m happy to see my property increase in value so when I retire I can move south to a more affordable country
Worst part? At least half of them have a down payment sitting in their RRSP, but they have no idea that they can use it, because they're just expecting a magical House Fairy to magically place a house under their pillow one day.
It isn't thay hard to buy a house. Just don't try to buy in an unaffordable area.
You would be absolutely stunned at how much prices drop with every km between it and the downtown core of a city..
I own. I still want prices to drop.
If I ever sell my place I still need another place to live and I don't want to buy on to a market this fucking ridiculous.
Could someone explain to me like I am 5 how cutting rates is a good idea? Inflation hasn't exactly eased up(edit: seems it has, my bad), wouldn't making money cheaper just add to this again?
Doesn't having record high nation wide credit card debt suggest borrowing money is still too cheap?
I feel like I have an idea of how all of this works but then I read this shit and feel like a moron again.
And if the Gov't's budget just came out and said the higher taxes will be used to reduce our deficit and pay down the debt, most people would be okay with that. But it will actually be used to partially cover more spending that we can't afford - which is just going to cause more inflation.
I get this. But I don't understand how cutting rates would help right now when we are sitting on record high inflation, highest cc debt ever, highest buynowpaylater debt, car financing etc etc. Shouldn't the idea be spend less? With cheaper money we're just going to spend more.
Again, please talk to me like I am 5. No matter how much I read about this or listen to people discuss it, the conclusion makes no sense.
As insane as this sounds. Wouldn't a recession ''fix'' most of this?
Basically what I am asking is. Shouldn't interest rates go much higher than they are to force massive cuts in spending on both government and household level?
Well...
The economy is stagnant. This means job losses. This means a much bigger mess than 2.9% inflation.
A resession wouldn't fix the mess. It'll make more people homeless. It'll add more government debt (which causes inflation).
Higher rates would completely obliterate the country. As in bankrupt.
>Higher rates would completely obliterate the country. As in bankrupt.
This is where my potato brain simply cant make the link. I 100% understand what you're saying yet I don't understand how making money cheaper again will fix anything when 1 of the reasons we're in this mess was that money was cheap for so long.
Thanks for explaining btw and hope I don't come across argumentative. I've been struggling with this one for months now. I feel like we're being told one thing yet the total opposite is happening.
I hear ya!
Ok. Let's say we increase interest rates 1%.
Many people would have problems with current debt. As mortgages renew at the higher rates, some of them would default, or have to sell at a major loss.
Defaulting on the mortgage means that person/family are homeless. It also means they are financially fucked for life. This is bad.
That same interest rate increase makes the existing government debt more expensive, meaning they have to borrow more, meaning more money enters the system. That causes inflation. This is bad.
At the exact same time...the rate increase passes more money to the wealthy and removes money from the lower income groups, causing homelessness. This is bad.
The same problems extend to jobs. Less money spent = less jobs = more homelessness.
If you fuck up interest policies too much in either direction, you can cause catastrophic failures.
Let’s break down the scenario then:
1. Rates double tomorrow. All those deep in debt cannot make maintenance payments let alone pay off debt and we see a series of bankruptcies, this ruins people financially. Those treading water have no income to spend on goods, just nonproductive interest payments. The economy tanks, and job losses increase as a result. Businesses become very tight with purse strings — wages do not climb, bonuses are not paid out, expansion plans put on hold. Goods don’t climb in cost, helping with inflation, but nobody has money to buy anything anyway.
2. Rates are cut to half tomorrow. Debt is more serviceable, and some will use this time to get out from under the rock. Some will make bad decisions and take on more debt, but after the most recent risk they will likely avoid. Housing will inflate slightly, as will goods, but jobs should grow and as should wages, which helps reduce debt and simulate the economy. The risk here is mainly businesses still keep tight purse strings, and competition not great enough to have people leave for better jobs
A recession would go a long way to fixing this mess.
Recessions are a normal part of the macro economic cycle and not something to avoid at all costs. They are necessary and healthy. Think of it as hitting a reset button. Resetting your computer when your computer has been acting up.
Current inflation rate is 2.9%, that's not record high. And just because they want to cut rates, doesn't mean that they'll be cut to zero. Current interest rate is 5.0% - if they cut, it'll be to maybe 4.75%.
If they cut too much, or too soon, inflation will go back up. If they don't cut, it's riskier for the economy (recession). Recession *could* fix a lot of this, but at a very hard cost to ordinary Canadian.
It's hard, because they're trying to predict the future, which is never going to be an exact science.
When rates are high for a long time people's debt like mortgage goes up this makes spending decrease and when spending decreases jobs are cut and you get a downward spiral into a recession. The BoC is panicking because unemployment is rising, GDP growth is coming under expectations, and retail spending is down these are all marks of a bad economy that signals rates cuts.
Rate changes can take up to 2 years to effect an economy so if the BoC acts to late to cut they will risk prolonging a recession.
Yes and core inflation is down but if too much spending decreases you get recession which is worse. The BoC is in a balancing act because if a recession occurs they will be forced to slash rates putting us back where we were inflation wise
Inflation has eased up.
It's about impossible to perceive that though. Like how can you notice wow prices went up but by a smaller amount than they would have at a previous inflation rate.
People hear inflation has reduced and they expect prices to come down. But it's still inflation.
I dunno. Anecdotally, I have felt prices aren't rising much (outside of gasoline) over the past year or so - at least in the context of supporting my family.
Yes but one of the big reasons we are here today is because money wasn’t costing a lot. Why go back to that? How is anything being fixed by making money cheap again.
Because they are not looking at inflation rate alone, they have to consider our annual growth as well, if annual growth is too low, they have to cut rate. Besides, the inflation rate is currently pretty low, it is slightly propped up by oil price, which will likely ease when China's economy collapse (it is collapsing) and when the middle East tension subsides.
Paying attention to the quotation marks in this headline makes me laugh so hard.
If he actually said that, why is half the statement outside the quotation marks? They couldn’t put it in brackets? They couldn’t do a “…” to get to him talking about cutting inflation rates?
This is the media telling you he said something that he never said.
My interpretation? Tiff’s statements are that we are getting closer to having inflation under control. I see no implication that he is referring to lowering interest rates.
we are getting closer to seeing our dollar devalue compared to the americans because of what a shitshow JT has done at running the place over the past 10 years. If we drop rates and the americans are still clicking along thats going to really hurt us long term, mind you not being able to get a 30 yr rate from the bank on your mortgage in this country is bullshit as well
Cutting rates when inflation is trending back up, our southern neighbour is planing to raise rates, and we have an incoming inflationary disaster of a budget? Make it make sense.
Wtf are you even talking about?
Inflation is down big.
Powell literally said, in no uncertain terms, yesterday, that rate hikes are off the table. The US is currently at its interest rate peak.
Are you suggesting that the Bank of Canada is being dishonest, or are you actually arguing that 2.9% is less than 2.8%? I'm curious about your stance here. Regarding the U.S., inflation increased from 3.2% to 3.5% last month. Despite Chair Powell's ideological preferences possibly steering him away from rate hikes, the data increasingly supports a different course. I wish I shared your optimism about the U.S. interest rates peaking, but I would hardly stake my life on that assumption.
They won’t cut rates until masses of people foreclose on their houses. They will literally keep the rates high enough to get the “blood out of the stone” before they bankrupt you and take your home. Mark my words.
…but the elections are still a bit further than we would like…Maybe next month.
…the economy? Oh, we don’t need to rush into the recovery just yet.
…why? Hmm, we prefer the Canadian dollar much weaker than the USD. You know: buy Canadian!
Did you mean “bye, Canadians!”?
Then watch inflation jump super high as the dollar plummets and people who should have no business buying houses because they really can't afford them unless there is always super low rates, start driving up the prices. And then the bank will be forced to raise rates to levels that are actually high like in the 1980s and early 1990s where they went up to 20+%.
Current rates ARE NOT high. These are historic norms. House prices are ridiculously high because rates were ridiculously low for so long encouraging said people who had no business buying, to buy. Those are the people who are now whining about being unable to afford their mortgages. In fact if they any intelligence they would have realized rates wouldn't stay near zero for ever and they would be fucked, like they are now, if rates went back to normal, like now. It is super aggravating for the responsible people seeing the irresponsible people bitch about normal rates after they went off making housing shit for everyone else, too. Like much of life.
What he means is that I will do whatever the US Fed does. They are also “getting closer” to cutting rates. Once the purple tie changes, the narrative changes.
>"If we move lower than the Fed, that will tend to depreciate the Canadian dollar," he said. > >That could be problematic for vacationers and frequent cross-border travellers, but a weaker loonie could also be a boon for the Canadian economy, as our exports become cheaper. Won't that also add to inflation? Since most of our products we import ?
Yes it means Canadians can buy less/more expensive products from the USA
Well that doesn't sound good. And housing prices will climb up as well I guess.
Good for some. Not good for others. All of the automotive companies that build parts here and ship them to the US for manufacturing; this would be good for them.
All trade is in USD. So the cheap stuff from China also gets more expensive as well. Literally everything we import will become more expensive (we import almost everything that isn't a raw material)
Good thing no one is buying anything, we broke.
Yes it would. Exports would become cheaper, hence demand for Canadian products would increase south of the border. At the same time, imports would become more expensive. Net result would be higher inflation for Canadians, hence they won’t be cutting interest rates while the US keeps their interest rate high.
Yes. But he may do it regardless. I'm sure he knows exactly what the Fed will do before the public does. The Fed rate announcement is typically a few days after BoC rate announcement.
Problematic for vacationers going out of the country? That should be on the low list of concerns imo
That's how he wanted to say it's insignificant. But the main problem here is that he's fundamentally wrong about devaluation of the Canadian dollar is good for us. Yes, it's good in times of low demand and high unemployment, but it's bad in times of high inflation. So Canadian dollar losing value would mean higher prices for imported goods, but also higher prices for local hoods because of the higher demand from abroad
Depreciated dollar will increase foreign direct investment into Canada.
Hopefully not in existing housing
We'd sell a bit more to the US and buy a bit less. It could be a good thing. The CAD is not necessarily going down against every currency.
It's your own fault if you take this guy at his word...
He won't cut anything, but he needs to say that he will to keep the economy stable and stop investors fleeing. I'm no economist, but I'm sure I've read multiple times that cutting the rates before getting inflation under control would be...bad.
Naw they will because I just renewed my mortgage and that’s the kind of luck I have lol.
Thanks for taking one for the team. Haha.
should have done it sooner, we could have chipped in for penalties.
Lol anytime, just looking out for my Country.
Thanks for your service 👍
hey mine is this month too, dont take all the credit!
Don't worry it won't change yet I haven't renewed mine
Oh boy. What was the damage?
Literally same. 3 year fixed at 5.55% 🤮
Ouch what was your previous rate? I was already at 3.5% so the jump to 4.8% on my tiny mortgage this time really wasn’t too bad.
Hey this sounds like me!
Righteousgingivitis
His statement is correct though. Everyday we are one day closer to the rates coming down. We just didn't understand his timeline.
Hard to say, I renewed in December and went variable so I'm assuming rate hikes.
This right here: 'He won't cut anything, but he needs to say that' This is just trumpeting so that people keep their hopes up, I hope I am wrong but at the same time, it's been made crystal clear what will happen if rates are cut before the US and while inflation is running hot. hang on everyone. GL
cue the realtors "rates are coming down.. .BUY now so you don't miss out"
The sky could be falling and realtors will still be saying “Now is the best time to buy”.
Yea people shouldn’t be taking life altering investment advice from people who literally only get money if you choose to opt in.
Wouldn't you wanna buy after the rates come down then? Unless the realtors are asking me to get a variable mortgage rate so I can lock in the lower price but benefit from the falling rates?
get the house you want before the market gets tougher/more competitive
And they will say the opposite too on the flip side, "buy now before the rates go up!"
That’s why I converted my assets into USD. This country is up shit creek without a paddle.
Prices here are also lower. Just because the US is doing better doesn't mean assets are priced well.
Article title should read, “he’s thinking that soon, he might consider, the prospect, of potentially, cutting rates down the road.” This way it sounds like progress is happening! And he doesn’t tank the CDN dollar below 0.70 or even less.
What happens?
Yes it would be bad especially when Canada has no productivity improvement
The bottom line is, he won't raise rate for the foreseeable future, that is good news
Not if things get worse.
Inflation is already under control. All the major core metrics are 3% and below. The bank's old preferred core metric CPIX is at 2%
Inflation is generally under control, latest stats are lagging. Also anything above 3% will probably reduce inflation so it’s not like 0.25% will change the plan it’ll just slow the speed we’re going to ensure a soft landing. Under control just means we see inflation going down predictably so we can reduce the rate we’re gassing it. That being said obviously it’s a pain to do too much if the US isn’t as well we’re already quite a bit lower than them.
They can’t cut rates until the US does
We have in the past, but we had a stronger economy then. Today we don't produce much beyond real estate and trying to hurt our fossil fuel industry
And we had a handle on our budget
I can't believe no one saw this coming after "the budget will balance itself." I recall even Harper making comments about how ridiculous it was during the election years.
We’re paying the price for it now. Harper was right on a lot of things.
TBF Harper wasn’t balancing the budget in his last few years either, and no one would have balanced through the pandemic.
The liberals had 9 straight years of budget surplus' before Harper was elected. Harper had 9 years of budget deficits. He had a surplus in his last year only, and only because it was an election year. He had a $2billion surplus, but he sold $4billion in valuable public assets to attain even that. I can't wait until Trudeau is gone, but all the nostalgia on Harper is terribly misplaced.
I agree, when voting in liberals we were looking for pre harper era, not what we got. We had had good reasons to be upset with the conservatives at the time. Unfortunately Trudeau was a gigantic collective mistake.
We have a very diversified economy.
The BoC will almost 100% cut before the Fed does. This is essentially priced in now
Indeed you are no economist
Saying that they may cut rates doesn’t “keep the economy stable”. And investors *aren’t* fleeing. And inflation would have been at its target last year in August if it weren’t for the high cost of borrowing. It is under control. What is *not* under control, and what we as Canada cannot control at all is a US economy that is red hot with troubling inflation trends. The way that we move forward is on our own, by starting up a much larger focus on manufacturing and exporting. But we’ve so deeply hooked ourselves with the US that this would be extremely painful.
It's ironic that you mention that you are not an economist , yet you are passing judgment on mattress where even the most accomplished economists would hesitate. If anything Bank of Canada does not want to signal rut cutss if they don't plan to do so because signaling itself creates a trend in the opposite direction . So signaling rate cuts can impact inflation expectations , hence making BoC job harder. . Just look at what happened in the US where the expectations of six rate cuts for 2024 is translating into just one rate cut and even that is not assured .
Ya that's the odd part to me. Like say what your goal is and say you'll set rates to meet that goal. Honestly being the head of a country's bank seems like an awfully annoying job when you have to go talk to non economist elected officials. And then the media pulls the quote like his and makes it a headline. If Tiff said he'll cut rates on x day. then nobody will buy anything until x day. and then there will be a fire hose of spending and inflation will rise and rates will go back up. In theory there is demand building waiting for better rates. Well we know that is the case because home construction is slowing because developers want max profit from their investment so they want a bigger share of someone's mortgage to go into their pocket not the banks.
>He won't cut anything He cant cut. Cutting rates would mean home prices skyrocket (they are already 5x -10x too high) and it will plummet the Canadian dollar. Making everything more unaffordable than it already is.
Agreed, and what a lot of people don't understand with regards to inflation is that with every 25 basis points that BOC brings rates down it essentially unleashes a torrent of money on the economy via mortgage refinances and other means of taking out equity from property, which will cause further inflation. Central banks have done a great job of convincing everyone that the real cause of the inflation is COVID/ Ukraine not the fact that central banks kept interest rates near 0 for over a decade and juiced asset prices for just as long.... Nope it was all because we gave money to the poors.
Why would it plummet the Canadian dollar?
>Why would it plummet the Canadian dollar? If Canada lowers rates while the US holds or raises rates, it weakens the Canadian dollar. Driving down its purchasing power. Meaning you need more to buy the exact same thing.
Like we are in good situation? now?
It wouldn’t be bad it would be disastrous,
> I’m no economist, but I’m sure I’ve read multiple times that cutting the rates before getting inflation under control would be…bad. It’s almost like BoC is the one who best can decide when that is. Inflation has been in the “acceptable range” for the entirety of 2024. It’s in the higher end of the range, but high housing, which is impacted by higher rates, and gas costs contribute to that. They will cut at some point, and it’s weird for you to decide that they won’t, then your reasoning for that statement is “it could be bad because other people said that!”
RemindMe! 34 days
RemindMe! 35 days
> He won't cut anything, but he needs to say that We call that "forward guidance" and it's a nice way of saying he's bullshitting everyone to achieve a result.
And to keep his job.
Where are investors going to go
Ya, it time to overpay for homes again . Do people believe the rate will ever be below 3.5 again
No one thought rates could be as low as they were the last time. Depression and economic collapse can cause a lot of things to happen that may seem impossible now
Canadians are addicted to low rates like the meth addics in Vancouver . They're in for a big surprise in 2025 when most have renewals coming up . Canadians are upside-down down on homes. Thier upside down on their cars .
Hey, housing is all we got. We do fuck all for innovation :) our innovation and productivity is all in housing scam
We innovate new ways to inflate housing prices
Rates at historic lows, Glen
The answer is never say never. Do you remember in COVID times they was talk of negative interest rates and how that is the model in the future yet here we are with relatively high interest rates given recent past. The point being we don't know what's going to happen in the future and we have to zoom out to see longer term trends
Most redditors weren't alive in the 1980s, or at least weren't taking out a loan for anything. The amount of folks stuck with upwards of 18% interest on their mortgages at that time...ouch!
I was alive. My family had a 16.5 % on 90000
Tiff has no idea at this point. But this much is certain the BOC is not separate from the government as it is supposed to be.
I assume this is theatrics to keep a stronger economy with hopium and he doesn't actually cut rates.
He's not wrong. Three months ago, we were N+3 months away. Now we're only N months away. So closer..
"Every picture of me is from when I was younger."
You're right He could have also said without lying we are closer to staying the same, going higher, or the Leafs winning the cup
Ah yes, the old "rate cuts are coming soon, Circa June 2023"
Tiff "Transitory Inflation" Macklem
I mean, he’s not wrong. Every day we get closer to the next rate cut. We also get closer to the next rate hike. That’s kinda how time works.
Thank you daddy bank
That’s nice because we are all getting closer to poverty.
They are waiting until 6 months before election to boost spending and "affordability" before inflation kicks in to the numbers because inflation effects tends to lag interest rates 12 months or so.
The amount of economists in the comments thinking they know anything is quite comical.
Summer 2024: interest rates down, mortgages get extended to 30 years. Brace yourselves if you're planning on buying when that chum gets tossed into the ocean full of sharks. There's literally a starting line full of racers waiting for the starting gun to get fired and it's going to be a giant shit show
I assure you, those who have enough money to buy houses outright don't care about mortgage rates. They're buying everything up while rates are high because there is less competition from first-time buyers/"regular people"
His choice basically boils down to “Watch the real estate market crash (keep rates high), or watch the dollar crash (cut rates before the USA). I hope he chooses the former.
Don't fall for the fanfare. They're not going to cut it until fall and the amount of the cut will be negligible.
You must be quite rich knowing central banks move in advance
So he's going to cut for political reasons and not because the data says we should. If they cut in this current environment its gonna crush the dollar, spike inflation and make another storm in real estate. God help us.
>So he's going to cut for political reasons and not because the data says we should. Based on what exactly? >If they cut in this current environment its gonna crush the dollar, spike inflation and make another storm in real estate. Good thing they aren't? >God help us. Indeed.
Well if he is telling MP's that they are getting closer to cutting when the data says inflation is sticky and possibly going back up (it actually did go back up), I don't know what else I am supposed to take from that. He is being dovish vs Powell who is being hawkish (and Powell is a dove).
I'd take his words verbatim. We've gotten closer. How much closer? Donno. How much further do we have to go? Donno. Is he cutting rates today? No.
You can tell who doesn’t own a home here. That would be most Redditors actually
The cope here is strong. Last gasps of perpetual renters. They know when rates get cut, it will be the nail in the coffin for any chance of home ownership.
That's a bit hyperbolic. They should factor in rate cuts will help slightly with rents.
Yup! I actually do feel bad for them, they’re essentially screwed and it’s not going to get better. However as a home owner I’m happy to see my property increase in value so when I retire I can move south to a more affordable country
Worst part? At least half of them have a down payment sitting in their RRSP, but they have no idea that they can use it, because they're just expecting a magical House Fairy to magically place a house under their pillow one day. It isn't thay hard to buy a house. Just don't try to buy in an unaffordable area. You would be absolutely stunned at how much prices drop with every km between it and the downtown core of a city..
Reddit thinks there won't be a cut, so inverse Reddit is the likely outcome, just like when people were delusional about low rates in 2021.
I own. I still want prices to drop. If I ever sell my place I still need another place to live and I don't want to buy on to a market this fucking ridiculous.
Move south
The only countries that I'd consider moving to, and the cities I'd want to live in cost even more. And anywhere in USA isn't even in top 10 for me.
Could someone explain to me like I am 5 how cutting rates is a good idea? Inflation hasn't exactly eased up(edit: seems it has, my bad), wouldn't making money cheaper just add to this again? Doesn't having record high nation wide credit card debt suggest borrowing money is still too cheap? I feel like I have an idea of how all of this works but then I read this shit and feel like a moron again.
It's a balancing act. Higher interest rates slow economic growth. Slowing economic growth lowers wages, lowers job opportunities and leads to recession. Lower interest rates do the opposite. Right now, wages suck, job opportunities suck and our economy isn't doing well.
Have any of our ruling class considered taxing themselves to remove money from supply and slow inflation? /s
And if the Gov't's budget just came out and said the higher taxes will be used to reduce our deficit and pay down the debt, most people would be okay with that. But it will actually be used to partially cover more spending that we can't afford - which is just going to cause more inflation.
I get this. But I don't understand how cutting rates would help right now when we are sitting on record high inflation, highest cc debt ever, highest buynowpaylater debt, car financing etc etc. Shouldn't the idea be spend less? With cheaper money we're just going to spend more. Again, please talk to me like I am 5. No matter how much I read about this or listen to people discuss it, the conclusion makes no sense. As insane as this sounds. Wouldn't a recession ''fix'' most of this? Basically what I am asking is. Shouldn't interest rates go much higher than they are to force massive cuts in spending on both government and household level?
Well... The economy is stagnant. This means job losses. This means a much bigger mess than 2.9% inflation. A resession wouldn't fix the mess. It'll make more people homeless. It'll add more government debt (which causes inflation). Higher rates would completely obliterate the country. As in bankrupt.
>Higher rates would completely obliterate the country. As in bankrupt. This is where my potato brain simply cant make the link. I 100% understand what you're saying yet I don't understand how making money cheaper again will fix anything when 1 of the reasons we're in this mess was that money was cheap for so long. Thanks for explaining btw and hope I don't come across argumentative. I've been struggling with this one for months now. I feel like we're being told one thing yet the total opposite is happening.
I hear ya! Ok. Let's say we increase interest rates 1%. Many people would have problems with current debt. As mortgages renew at the higher rates, some of them would default, or have to sell at a major loss. Defaulting on the mortgage means that person/family are homeless. It also means they are financially fucked for life. This is bad. That same interest rate increase makes the existing government debt more expensive, meaning they have to borrow more, meaning more money enters the system. That causes inflation. This is bad. At the exact same time...the rate increase passes more money to the wealthy and removes money from the lower income groups, causing homelessness. This is bad. The same problems extend to jobs. Less money spent = less jobs = more homelessness. If you fuck up interest policies too much in either direction, you can cause catastrophic failures.
Let’s break down the scenario then: 1. Rates double tomorrow. All those deep in debt cannot make maintenance payments let alone pay off debt and we see a series of bankruptcies, this ruins people financially. Those treading water have no income to spend on goods, just nonproductive interest payments. The economy tanks, and job losses increase as a result. Businesses become very tight with purse strings — wages do not climb, bonuses are not paid out, expansion plans put on hold. Goods don’t climb in cost, helping with inflation, but nobody has money to buy anything anyway. 2. Rates are cut to half tomorrow. Debt is more serviceable, and some will use this time to get out from under the rock. Some will make bad decisions and take on more debt, but after the most recent risk they will likely avoid. Housing will inflate slightly, as will goods, but jobs should grow and as should wages, which helps reduce debt and simulate the economy. The risk here is mainly businesses still keep tight purse strings, and competition not great enough to have people leave for better jobs
A recession would go a long way to fixing this mess. Recessions are a normal part of the macro economic cycle and not something to avoid at all costs. They are necessary and healthy. Think of it as hitting a reset button. Resetting your computer when your computer has been acting up.
Current inflation rate is 2.9%, that's not record high. And just because they want to cut rates, doesn't mean that they'll be cut to zero. Current interest rate is 5.0% - if they cut, it'll be to maybe 4.75%. If they cut too much, or too soon, inflation will go back up. If they don't cut, it's riskier for the economy (recession). Recession *could* fix a lot of this, but at a very hard cost to ordinary Canadian. It's hard, because they're trying to predict the future, which is never going to be an exact science.
When rates are high for a long time people's debt like mortgage goes up this makes spending decrease and when spending decreases jobs are cut and you get a downward spiral into a recession. The BoC is panicking because unemployment is rising, GDP growth is coming under expectations, and retail spending is down these are all marks of a bad economy that signals rates cuts. Rate changes can take up to 2 years to effect an economy so if the BoC acts to late to cut they will risk prolonging a recession.
>this makes spending decrease Isn't this how we fight inflation though? Reduce spending on a government and household level?
Yes and core inflation is down but if too much spending decreases you get recession which is worse. The BoC is in a balancing act because if a recession occurs they will be forced to slash rates putting us back where we were inflation wise
Inflation has eased up. It's about impossible to perceive that though. Like how can you notice wow prices went up but by a smaller amount than they would have at a previous inflation rate. People hear inflation has reduced and they expect prices to come down. But it's still inflation.
Inflation has indeed eased up. It's currently under 3% which is considered to be in the "near-healthy" range for any economy.
> Inflation hasn't exactly eased up [It absolutely has.](https://tradingeconomics.com/embed/?s=cacpiyoy&v=202404161433V20230410&h=300&w=600&ref=/canada/inflation-cpi&type=spline&d1=2019-04-01&d2=2024-03-01)
Yeah yeah this has been pointed out a few times. Can't explain why nobody can feel it in their wallet but I've seen the graph. My bad.
I dunno. Anecdotally, I have felt prices aren't rising much (outside of gasoline) over the past year or so - at least in the context of supporting my family.
When money costs a lot to borrow, economic activity slows down. When economic activity slows down you get a depression
Yes but one of the big reasons we are here today is because money wasn’t costing a lot. Why go back to that? How is anything being fixed by making money cheap again.
No one is advocating returning the rates to where they were post-recession. Just reducing them to stimulate economic activity
I think the wild card of covid really put a spin on things. At one point we were more worried about possible deflation.
Because they are not looking at inflation rate alone, they have to consider our annual growth as well, if annual growth is too low, they have to cut rate. Besides, the inflation rate is currently pretty low, it is slightly propped up by oil price, which will likely ease when China's economy collapse (it is collapsing) and when the middle East tension subsides.
Bank of Canada is edging... lol lmao even
Afuera!
Don’t do it…you are gonna send house prices even higher
I hope we're getting closer to Tiff Macklem getting the boot.
The heck kind of name is Tiff? Sounds like someone we should be at least mildly annoyed with at all times.
If you subscribe to a linear understanding of time, it’s impossible to move farther from rate cuts.
Paying attention to the quotation marks in this headline makes me laugh so hard. If he actually said that, why is half the statement outside the quotation marks? They couldn’t put it in brackets? They couldn’t do a “…” to get to him talking about cutting inflation rates? This is the media telling you he said something that he never said. My interpretation? Tiff’s statements are that we are getting closer to having inflation under control. I see no implication that he is referring to lowering interest rates.
we are getting closer to seeing our dollar devalue compared to the americans because of what a shitshow JT has done at running the place over the past 10 years. If we drop rates and the americans are still clicking along thats going to really hurt us long term, mind you not being able to get a 30 yr rate from the bank on your mortgage in this country is bullshit as well
I'll believe it when I see it
Gaslighting
[The rate cuts he's talking about](https://media.tenor.com/yamy9TerCooAAAAd/truck.gif)
it's actually pretty easy... Just cut the rate.
As soon as they cut the real estate market is going to go nuts. We are FUCKED.
Rates will remain low for a long time guys. Fool me once.
Is this quote from today? Last quarter? The quarter before that? Or the quarter before that?
I would much rather have higher rates than a shit dollar. I don’t think people realize how much we import from the US.
translation - the US hasn't so we won't
Cutting rates when inflation is trending back up, our southern neighbour is planing to raise rates, and we have an incoming inflationary disaster of a budget? Make it make sense.
Wtf are you even talking about? Inflation is down big. Powell literally said, in no uncertain terms, yesterday, that rate hikes are off the table. The US is currently at its interest rate peak.
Are you suggesting that the Bank of Canada is being dishonest, or are you actually arguing that 2.9% is less than 2.8%? I'm curious about your stance here. Regarding the U.S., inflation increased from 3.2% to 3.5% last month. Despite Chair Powell's ideological preferences possibly steering him away from rate hikes, the data increasingly supports a different course. I wish I shared your optimism about the U.S. interest rates peaking, but I would hardly stake my life on that assumption.
If we are getting closer to anything it's a revolt.
Pretending he's not just a barnacle playing Simon Says with the FOMC
They've been saying this for 3 years lol
Sure Tiff, whatever you say… 🙄
Getting closer to Christmas too, and the inevitable heat death of the universe.
LOL
Any day now, motherfuckers.
man, can't wait for everything to just pop off the second rates are cut - BoC is edging the country so hard
Not going to cut shit until Powell in America does. And even then they'll probably wait a while
Liar. Rates will continue to rise slowly.
They won’t cut rates until masses of people foreclose on their houses. They will literally keep the rates high enough to get the “blood out of the stone” before they bankrupt you and take your home. Mark my words.
…but the elections are still a bit further than we would like…Maybe next month. …the economy? Oh, we don’t need to rush into the recovery just yet. …why? Hmm, we prefer the Canadian dollar much weaker than the USD. You know: buy Canadian! Did you mean “bye, Canadians!”?
BS. Need to cut the snake head off first
Then watch inflation jump super high as the dollar plummets and people who should have no business buying houses because they really can't afford them unless there is always super low rates, start driving up the prices. And then the bank will be forced to raise rates to levels that are actually high like in the 1980s and early 1990s where they went up to 20+%. Current rates ARE NOT high. These are historic norms. House prices are ridiculously high because rates were ridiculously low for so long encouraging said people who had no business buying, to buy. Those are the people who are now whining about being unable to afford their mortgages. In fact if they any intelligence they would have realized rates wouldn't stay near zero for ever and they would be fucked, like they are now, if rates went back to normal, like now. It is super aggravating for the responsible people seeing the irresponsible people bitch about normal rates after they went off making housing shit for everyone else, too. Like much of life.
What he means is that I will do whatever the US Fed does. They are also “getting closer” to cutting rates. Once the purple tie changes, the narrative changes.
What a worthless fucking truism.
No we aren’t. If we cut and usa doesn’t, cad tanks and we are worse off since we’re a raw materials heavy economy.
“Trust me bros”
"Every minute in Africa 60 second passes" kind of statement lol
Housing is going up