It was a bold rate prediction made by a solid source, but one that has already been shot down by the channel’s leading economist.
“Very doubtful [the Bank of Canada will eventually lower its rate to 0%],” Dr. Sherry Cooper, chief economist for Dominion Lending Centres
told MortgageBrokerNews.ca. “Would mean three more rate cuts and take mortgage rates down another 50 bps.”
Former Bank of Canada Advisor David Wolf, who currently works for Fidelity Investments, told Bloomberg last week that the Bank of Canada will eventually axe its overnight rate to zero per cent, joining a number of other countries having done the same.
“There’s a reason why rates are zero just about everywhere else in the developed world,” Wolf, who worked under former Bank of Canada governor Mark Carney
, told Bloomberg.
He said zero rates will eventually happen in Canada as well.
Stranger things have, perhaps, happened.
The Bank of Canada surprised the industry when it lowered its target for the overnight rate by one-quarter per cent to 0.75 per cent in late January. It was the first rate change in over four years.
According to a Bloomberg news article published at the time, none of the 22 economists who took a Bloomberg news survey predicted that move.
The next Bank of Canada rate announcement is scheduled for April 15.