BoC raises benchmark interest rate to 0.75%
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19/07/2010 8:20:00 PM
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The Bank of Canada raised its benchmark interest rate by 25 basis points for the second time in two months, even as households and governments in the developed world continue to cut back on spending.
The rate is now 0.75 per cent. The bank said any further increases “would have to be weighed carefully against domestic and global economic developments.”
The central bank became the only one in the Group of Seven to hike its key lending rate after keeping it at unprecedented lows during the recession.
While economic growth in Canada has largely relied on consumer spending, the bank now projects that business and trade will make up a larger part of the country’s gross domestic product, but overall growth won’t be as large as the bank previously thought.
The bank now estimates that Canadian GDP will expand 3.5 per cent in 2010 and 2.9 per cent in 2011, down from the previous projection of 3.7 per cent and 3.1 per cent respectively.
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Dom on
20 Jul 2010 12:07 PM
I'm not sure what planet the BoC is on. There is no way the GDP will expand to 3.5 per cent. Expect housing, business and households to reduce spending. Also 70% of that GDP is reliaent on the US. Are they not hearing the data that is coming out of our largest trading partners?
Don on
20 Jul 2010 12:22 PM
Great! Now we really can't tell who has the worst policies for the Canadian economy- Harper's (we know best) Federal Government or McGuinty's (the HST will only hurt a little bit) Ontario Liberals. All we know for sure is that the poor Canadian Citizen and Tax Payer will pay for the folly of both levels of government.
mortgage needs on
20 Jul 2010 01:36 PM
In any expansive country there are bound to be differences, including economic differences, so there will be regions that require more help than others; just as there will be industry sectors that will need help more than others. There are ways to help industry in general, and specific industry sectors, without lowering interest rates. What about the old-fashioned ways of having government more precisely target certain sectors or help small business & startups by say giving tax holidays for instance ? We all have to worry that ultra low interest rates will take away an important tool of monetary policy and it won't be there for us when we really need it.
mortgage needs on
20 Jul 2010 04:21 PM
Besides, everyone will have noticed at the last BoC rate rise that lenders increased their discount off Prime rate, such that you could still get a Variable Rate on 5-year Closed Term at 1.85%. Fixed Rates also went down when the bond market adjusted. The dynamics of fairly free market competition has kept rates low and is surely not hurting the housing sector.