Last month, the US Fed Reserve Bank Chairperson, Janet Yellen, raised rates for the first time since 2006. Historically, Canada follows the US with rate movement.. However, times are changing…Don’t expect Canada to follow the US move anytime soon.
Divergence. That’s the new buzz-word. Bank of Cda Govr, Stephen Poloz said, “Usually you think of the Canadian economy following the U.S. economy fairly closely. This will be one of those places where it really doesn’t.” “But as a macro statement, there will a divergence there. We’re already seeing it, and so you should expect a divergence in policy too,” he said.
WHERE IS CANADA GOING WITH INTEREST RATES?
We are still very much in bed with the US when it comes to trade and business… however, we’ve gone our own for quite some time now, when it comes to interest rates. We were one of the few countries in the world NOT affected by the US sub-prime mortgage crisis of 2008.
In 2010, the BOC (Bank of Cda) raised the rates with three 0.25% rate hikes. Most other countries were not changing them at that time. Then in 2015, the BOC lowerer the rate with two 0.25% rate cuts (of course, the BIG SIX BANKS showed their true greed and didn’t pass on that savings and only cut rates by 0.30%.. but that’s another story).
My message and advice… don’t pay too much attention to the media headlines saying rates have changed or moved. There really hasn’t been much movement in the last 7 yrs. And it’s probably not gonna change much in the next few years.
Be happy.. Interest rates are ridiculously low today… enjoy!
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Steve Garganis 416 224 0114 firstname.lastname@example.org