Mortgage Logic

Bank of Canada Does Nothing to Rate – March 7, 2019

The Bank of Canada is having to recast its’ projections of a slower economy as thought in the previous two quarters. They had expected a lag in the economy for late 2018 & early 2019 only, but this has changed. A slower economy seems to be with us for a while and there is thinking now that there will be no further rate increases throughout 2019.

The economic headwinds for Canada are harsh for the following reasons:
• Lower Canadian producer oil prices – even lower than world oil prices. The Oil patch in Canada has a
very difficult challenge ahead with resistance to pipeline development and no support from Ottawa.
• Onerous taxation policies – personal & corporation.
• Weaker domestic consumer spending and housing investment – continues.
• Exports and business investment have fallen short of expectations
• Global demand for goods and services is generally softening
• Trade disputes among larger economies (China & USA) prevail

All of these factors are taking their toll on the Canadian economy. They are all reasons why the BoC will likely be forced to lower their key rate in the short to medium term.

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