Money BoC rate hike has both pros and cons

13:31  12 july  2018
13:31  12 july  2018 Source:

Canadian home ownership costs hit 'multi-decade highs': RBC

  Canadian home ownership costs hit 'multi-decade highs': RBC Canadian home ownership costs hit 'multi-decade highs': RBCAfter improving slightly in the final three months of last year, home affordability worsened once again at the start of this year, according to Royal Bank of Canada, with housing costs hitting a "multi-decade high.

A dovish Bank of Canada ( BoC ) rate - hike may produce a bearish reaction in the Canadian dollar as the central bank remains in no rush to. Impact that the BoC rate decision has had on USD/CAD during the last meeting.

A rate hike is a good thing. 1. The U.S. economy. America has recovered from the Great Recession, even if the rate of growth has often seemed anemic. The November jobs report had the unemployment rate holding unchanged at 5 percent, a seven-year low.

a close up of a building© Provided by The Bank of Canada's latest interest rate hike means higher borrowing costs for consumers with variable-rate mortgages, loans or lines of credit, but it is also good news for savers and future homeowners.

The decision to increase its benchmark interest rate to 1.5 per cent on Wednesday prompted all of Canada's Big Six banks to raise their prime rates, thereby passing the rate increase along to their customers.

Those with variable-rate mortgages will now face higher interest payments, a concern for many Canadian households that are already saddled with hefty debt loads, said Samantha Brookes, chief executive officer of brokerage Mortgages of Canada.

Poloz widely expected to raise rate this week

  Poloz widely expected to raise rate this week After waiting for half a year, Stephen Poloz appears ready to get back on his rate-hiking path this week. Recent signals from the Bank of Canada governor, combined with strong economic data, have experts widely predicting Poloz will raise his trend-setting rate Wednesday from its current level of 1.25 per cent.

He is counting on at least one more rate hike this year and would not be shocked to see two. If this occurs, it would mark a significant turning point, both for the BoC and for the Canadian economy. Over the past quarter-century, and even more so over the past decade, Canadian households have

Both exchange rates are higher than they were before the BoC ’s announcement. The market thinks the BoC will hike but has largely chosen to react to the decision rather than put trades on beforehand."

"Increasing rates just really limit how much they have available to them on a monthly basis," she said.

The prime lending rate is the rate that banks use to set interest rates for variable-rate mortgages and other loans. Wednesday's rate hike was the central bank's first interest rate move in six months and lifted the trend-setting rate to 1.5 per cent, up from 1.25 per cent. It also marked the bank's fourth increase over the last 12 months and the first time the rate has been this high since December 2008.

The central bank's move was driven by the strength of Canada's economy, which it expects will remain resilient despite headwinds from trade tensions with the U.S.

After the central bank's announcement, Royal Bank of Canada, TD Canada Trust, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and National Bank all said they will increase their prime rate by a quarter of a percentage point to 3.70 per cent, effective Thursday.

Bank of Canada expected to resume tightening key interest rate Wednesday

  Bank of Canada expected to resume tightening key interest rate Wednesday The Bank of Canada is widely expected to boost a key interest rate on Wednesday as it resumes efforts to "wean" the economy off low borrowing costs. The bank's target for the overnight rate — what major financial institutions charge each other for one-day loans —   has been at 1.25 per cent since mid-January. Since then, the bank has stood firm on three subsequent rate announcements. That string is generally expected to end this week. As of Tuesday, the implied probability of a rate hike to 1.5 per cent stood at just over 96 per cent, according to Bloomberg.

The Bank of Canada, led by governor Stephen Poloz, has hiked its benchmark lending rate to 1.25 per cent. "I believe it would be net negative for both Canada and for the U.S.," he said of the theoretical demise of NAFTA, "but to actually quantify that is very difficult, because every sector is affected

Узнать причину. Закрыть. Expectations for BOC rate hike increase. instaforex. Today the greenback-loonie pair trading will hardly be active due to the national holidays in both countries.

The rates had previously been set at 3.45 per cent.

The increase raises the cost of borrowing for customers with variable-rate loans, but people with money socked away in savings accounts and guaranteed investment certificates will benefit, said Scott Hannah, the president and chief executive of the Credit Counselling Society.

"It helps seniors who depend on interest income to help fund their retirement expenses," he said. "And the rate hikes are keeping Canadians focused on the need to curb their appetite for debt and pay down the debt they have."

Higher interest rates, along with stricter mortgage rules, have also helped to cool down the country's real estate markets, helping future homeowners, Hannah said. It's unwelcome news, however, for those looking to renew their mortgages this year, he added.

Overall, the impact of the latest rate hike will be modest for consumers, said Meny Grauman, an analyst with Cormark Securities Inc. The rate hike is in reaction to a healthy Canadian economy, which is beneficial, he added.

Rates are slowly on the way up, but remain relatively low historically, Grauman added.

"On balance, it's still probably a positive for the average household, for the average business."

Is the rate hike bad news for these 3 stocks? .
Canadian Pacific Railway Limited (TSX:CP)(NYSE:CP) and other companies sensitive to foreign exchange fluctuations may not be welcoming another rate hike.Renewed trade tensions and calls for further protectionism pushed up the U.S. dollar, which, in turn, dragged down the Canadian dollar. Governor Stephen Poloz said that there would likely be one more rate hike in 2018, but he also urged caution due to this recent bout of protectionism. Experts forecast that the central bank will leave rates unchanged until a key October meeting.


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