Association warns BoC prior to today’s announcement

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Royal LePage is warning the Bank of Canada against making yet another rate cut later today.

“It seems premature to ring the recession alarm bells now, injecting further monetary stimulus,” Phil Soper, president and chief executive officer, Royal LePage said in an official release. “The country’s all-important real estate market simply does not need a rate cut.  I worry that stoking this engine further could move us from a perfectly manageable major market expansion into a more difficult correction, as price levels decouple from more household incomes.”

The Bank of Canada will announce later today what it plans to do with the benchmark overnight rate.

And economists are split on what decision the central bank will make.

According to a Bloomberg poll, 16 of 29 economists believe the central bank will slash the overnight rate by a quarter point to 0.5 per cent.

It would be the second rate cut this year; the Bank of Canada made its first rate change in over four years when it cut the overnight rate from one per cent to ¾ per cent in late January.

However, while low oil prices, European economic uncertainty, and market volatility in China all place pressure on the Canadian economy, Soper doesn’t believe these pressure are enough to warrant a rate cut.

“While the oil shock has been a troublesome drag on our economy this year, it seems premature to ring the recession alarm bells now, injecting further monetary stimulus,” Soper said. “The country’s all-important real estate market simply does not need a rate cut.  I worry that stoking this engine further could move us from a perfectly manageable major market expansion into a more difficult correction, as price levels decouple from more household incomes.”
 

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