BOC holds interest rate again today.....

[dle]

https://www.castanet.net/news/Business/ ... -unchanged

The decision leaves the trend-setting rate at 1.75 per cent for a fourth-straight announcement — a pause that followed governor Stephen Poloz's stretch of five hikes between mid-2017 and last fall.

The bank says the economy was operating close to full tilt for most of 2017 and 2018 before a sudden deceleration in the final months of last year, which was largely caused by a drop in oil prices and unexpectedly weak numbers for investment and exports.

Seriously?! This is how I figure it.

I venture to say the sudden deceleration of the economy in the final months of the year was directly in proportion to them UPPING THE RATES 5 TIMES in slightly over A YEAR!! WTH did they expect would happen?

Plenty of economists warned them to lighten up and leave some room for absorption and not raise so fast. Did they listen? Nope. They did nothing but spout doom and gloom about our "record high debt" (that caused the booming economy by the way), so they kept raising rates to cool it down - to encourage people TO NOT SPEND. Now, SURPRISE! No one is spending because they can't afford the 5 rates hikes in such a short period of time with no time for absorption and all their disposable income is now going to higher payments. So, what does BOC do now? They hold the rates (like closing the barn door when the horse is 3 fields away) and claim the drop in the economy is largely oil etc. A lot of people are not spending because they don't TRUST what the BOC will do and they don't want to get caught up in their games again for one thing.

The deceleration has nothing to do with all the fear-mongering the BOC did asking people to STOP spending and their raising of the rates - at least that is what they want us to believe. People stopped spending just like they wanted to happen.

Now, BOC is all a-twitter when they see the economy is slowing BECAUSE people stopped spending!

What a goofy merry-go-round Poloz has created here. He moved too fast once he started.

Watch for it.....after all of this, how long do you think it will be before Poloz decides to DROP the rates? Wouldn't surprise me if instead of the 3 rate increases he railed at us for this year, that there will now be at least 1 drop this year. So, all the people he put into financial distress with his galloping increases might have been able to get their head above water after all if he hadn't been so cocky and arrogant.

Now he's holding rates - but NOW is too little too late as the saying goes!

[Carrs Landing Viking]

Poloz should be fired, as I believe he is incompetent. I also have to wonder where he gets his "direction" from.

[Gilchy]

The other reason to raise rates as quickly as they did was to put some "ammo in the chamber"; when the economy does slow, which it will at some point as part of the cycle, the are able to drop rates to stimulate again.

[dle]

The other reason to raise rates as quickly as they did was to put some "ammo in the chamber"; when the economy does slow, which it will at some point as part of the cycle, the are able to drop rates to stimulate again.

Understood and now they have lots of "ammo" - however it came at a high price for some Canadians.

No argument rates had to go up but my argument is they went up WAY too fast and caused a lot of hardship for some people and now they are just going to have to turn around and use some of their "ammo" by lowering them again. Problem is, people are shy now to just go spend willy-nilly so if he thinks he can use that method to stimulate the economy this time he might be in for a rude awakening.

Too many people don't trust his judgment anymore.

[Vacancyrate]

They did nothing but spout doom and gloom about our "record high debt" (that caused the booming economy by the way), so they kept raising rates to cool it down - to encourage people TO NOT SPEND.

It's not a boom if everyone is digging a hole for themselves that they can't get out of. Canadians owe $1.81 for every dollar that they earn now. It's a debt-pit. Not a boom.

Now, SURPRISE! No one is spending because they can't afford the 5 rates hikes in such a short period of time with no time for absorption and all their disposable income is now going to higher payments.

Canadians stopped spending because they are maxxed out and the BoC isn't going to let Canadians run up their credit cards to insanity levels. Wages have not risen with inflation for almost 30 years and the only reason people can maintain their standards of living (besides sending mom to work fulltime and driving Uber on weekends) is by putting things on credit.

So, all the people he put into financial distress with his galloping increases might have been able to get their head above water after all if he hadn't been so cocky and arrogant.

If people are distressed because of a few interest rates hikes (which are still at ultra low levels) then it shows how vulnerable our economy is and how stupid Canadians are with credit.

Interest rates will climb back up to normal levels, unless you want to see a 50 or 40 cent Canadian dollar.

The pain is coming.

[dle]

They did nothing but spout doom and gloom about our "record high debt" (that caused the booming economy by the way), so they kept raising rates to cool it down - to encourage people TO NOT SPEND.

It's not a boom if everyone is digging a hole for themselves that they can't get out of. Canadians owe $1.81 for every dollar that they earn now. It's a debt-pit. Not a boom.

Now, SURPRISE! No one is spending because they can't afford the 5 rates hikes in such a short period of time with no time for absorption and all their disposable income is now going to higher payments.

Canadians stopped spending because they are maxxed out and the BoC isn't going to let Canadians run up their credit cards to insanity levels. Wages have not risen with inflation for almost 30 years and the only reason people can maintain their standards of living (besides sending mom to work fulltime and driving Uber on weekends) is by putting things on credit.

So, all the people he put into financial distress with his galloping increases might have been able to get their head above water after all if he hadn't been so cocky and arrogant.

If people are distressed because of a few interest rates hikes (which are still at ultra low levels) then it shows how vulnerable our economy is and how stupid Canadians are with credit.

Interest rates will climb back up to normal levels, unless you want to see a 50 or 40 cent Canadian dollar.

The pain is coming.

agree with it all. Still the BOC KNEW how badly a lot of people had gone into debt and along with their warnings upping the rates MORE GRADUALLY would have still sent the message to get the books balanced and in order and a new payment plan in place. Warnings of future increases instead of rapido increases would have given the space needed to tighten the belts for MOST people - sure, there would have been some who would have ignored all the warnings, or some who were just so far gone that they couldn't pay a penny more no matter what. I think the majority of people would have felt the brick upside their head and formed a realistic plan. It just went too fast.

My thoughts are slow and steady would have won this race - gave people time to absorb, rates would be able to continue to rise albeit with more time in between. Three increases in a year and a quarter would have been about right.

And yes, even that little bit would have sent some people over the edge but not as many. For those few who were just in it over their heads there wasn't any way out for them anyway but bankruptcy probably.

[GordonH]

Knowing how many households across Canada are on the very edge of a cliff with their mortgage. Any increase may very well cause massive foreclosure everywhere.

At one time keeping mortgage payment under 40% of the household income was key thing to do. Suspect that is not the case

[Vacancyrate]

Still the BOC KNEW how badly a lot of people had gone into debt and along with their warnings upping the rates MORE GRADUALLY would have still sent the message to get the books balanced and in order and a new payment plan in place. Warnings of future increases instead of rapido increases would have given the space needed to tighten the belts for MOST people - sure, there would have been some who would have ignored all the warnings, or some who were just so far gone that they couldn't pay a penny more no matter what. I think the majority of people would have felt the brick upside their head and formed a realistic plan. It just went too fast.

You've stumbled into the GREAT CANADIAN DEBT PONZI SCHEME. The BoC knows the only thing floating the entire Canadian economy is insane levels of debt and very unaffordable home prices.

The BoC has a choice.

Crash the economy by raising rates to NORMAL levels or let Canadians continue to go into debt and continue to let home prices skyrocket.

The name of the game now is "keep everything running until the election". With one hand they keep the stress test in place to prevent Canadians from over leveraging themselves and with the other they hold (or drop) rates in order to get Canadians to go into more debt. The next government will have to deal with it and The Liberals will run on a "strong (debt saturated) economy".

It's literally a ponzi scheme. As long as everyone keeps going into debt everything keep chugging along!

[dle]

Still the BOC KNEW how badly a lot of people had gone into debt and along with their warnings upping the rates MORE GRADUALLY would have still sent the message to get the books balanced and in order and a new payment plan in place. Warnings of future increases instead of rapido increases would have given the space needed to tighten the belts for MOST people - sure, there would have been some who would have ignored all the warnings, or some who were just so far gone that they couldn't pay a penny more no matter what. I think the majority of people would have felt the brick upside their head and formed a realistic plan. It just went too fast.

You've stumbled into the GREAT CANADIAN DEBT PONZI SCHEME. The BoC knows the only thing floating the entire Canadian economy is insane levels of debt and very unaffordable home prices.

The BoC has a choice.

Crash the economy by raising rates to NORMAL levels or let Canadians continue to go into debt and continue to let home prices skyrocket.

The name of the game now is "keep everything running until the election". With one hand they keep the stress test in place to prevent Canadians from over leveraging themselves and with the other they hold (or drop) rates in order to get Canadians to go into more debt. The next government will have to deal with it and The Liberals will run on a "strong (debt saturated) economy".

It's literally a ponzi scheme. As long as everyone keeps going into debt everything keep chugging along!

Good analysis! It's a shell game and too many people can't keep their eye on the rock.....I guess it's best to just ignore the "expert" forecasts, don't listen to the malarky, and don't get dazzled by low rates. Keep a close eye on your own bank balance and debt and don't purchase a new thing until the last thing is paid off. It just takes a little bit of patience but I think so many people have the "I work hard, I deserve these fun things, I can't take it with me, I don't want to wait, saving takes to long...." and so on.

I sound like I'm holding a lecture lol - sorry about that - but it really does work that way if you want to sleep at night and still enjoy some nice things. Young people these days are particularly vulnerable to the "I want it now" syndrome - they've never known high interest rates in their lives and hearing dollar values of close to HALF A MILLION DOLLARS for a starter home is normal for them! They have some hard lessons to learn and one of them is DON'T TRUST THE GOVERNMENT (whichever one is in power)! They will play you like a fiddle.....

[Catsumi]

Yes, be very cautious and circumspect about your spending habits. Save as much gold as you can.

In normal times those actions would be wise but we have an aggressive,sneaky pickpocket robbing us blind: The federal government's lavish spending which we have to pay for, sooner or later through ever higher taxation bearing different names to placate us.

[Vacancyrate]

Young people these days are particularly vulnerable to the "I want it now" syndrome - they've never known high interest rates in their lives and hearing dollar values of close to HALF A MILLION DOLLARS for a starter home is normal for them!

I think that Canadians homeowners will get bailed out just like the Wall Street crooks did.

They will be rewarded with tax-dollars for gambling and losing.

There has been huge movement in the alternative lending market and many people have 2nd or 3rd mortgages against their first overvalued home. Most 1st mortgages though are insured by the Canadian Government so that banks could care less if Canadians have the ability to repay those debts.

Voting baby boomers are all set to retire in style and if their million dollar bungalow suddenly drops in value, that Mexican condo retirement plan vanishes. They will get bailed out and people who have been saving will be punished with perpetual high home prices.

[dle]

Young people these days are particularly vulnerable to the "I want it now" syndrome - they've never known high interest rates in their lives and hearing dollar values of close to HALF A MILLION DOLLARS for a starter home is normal for them!

I think that Canadians homeowners will get bailed out just like the Wall Street crooks did.

They will be rewarded with tax-dollars for gambling and losing.

There has been huge movement in the alternative lending market and many people have 2nd or 3rd mortgages against their first overvalued home. Most 1st mortgages though are insured by the Canadian Government so that banks could care less if Canadians have the ability to repay those debts.

Voting baby boomers are all set to retire in style and if their million dollar bungalow suddenly drops in value, that Mexican condo retirement plan vanishes. They will get bailed out and people who have been saving will be punished with perpetual high home prices.

Yes and I'm sure we've all noticed that while the rates on our LOC's etc are going up, the rates the banks pay on savings barely move if at all - they certainly don't keep step with the BOC increases. "Saving" money costs you money (in not keeping up with inflation) in some cases so at the very least for those determined to "keep it safe" it has to be in a TFSA or RSP GIC where you can get "special" rates like 2.50 I think Tangerine for an example is paying on a 1yr GIC right now - it's a pittance but compared to their monthly TFSA regular rate of 1.25 at least it's better. I think RBC is only paying 1.1 on high-interest rate saving.

So a lot of people felt if they could get their foot in the door and buy some property that would make up for the crap rates being paid out. They did whatever they had to do and leveraged everything to get that high priced property thinking it would be the goose that laid the golden egg. Worked for some people - got in and got out and made like bandits. Others, who actually live in their properties have to be prepared for the ebbs that happen and timing is everything. But all too often "life" happens to screw that timing up and your golden goose lays a rotten egg.

[Vacancyrate]

I remember getting +15% on my savings account in the 80's.

Compound interest.

Now it's compound debt.